American Tower is set to spend $1 billion acquiring tower assets from Vodafone India and Idea Cellular.
The US tower firm emerged as the preferred candidate after negotiations with Brookfield Asset Management and IDFC Project Equity fell through due to disputes over the valuation of the towers. The details of the agreement are still being finalised.
Vodafone, the country’s second largest operator, currently holds around 11,000 towers, while third-placed Idea has almost 9000. The two operators are on track to merge by mid-2018, which will create a new market leader in India with around 411 million connections, giving it a market share of 34%.
Together with market leader Bharti Airtel, both firms also have holdings in Indus Tower, which operates around 123,000 towers. Airtel’s stake in Indus Tower is held via its 61.65% ownership of tower firm Bharti Infratel. A further 10.33% stake in the company is held by Canada Pension Plan Investment Board (CPPIB) and private equity firm KKR, after the firms jointly invested $954 million in Indus earlier this year.
Vodafone, Idea and Providence Equity Partners hold 58% of Indus Towers between them, and Infratel is reportedly looking to obtain most or all of this from them for between $5.5 - $6.5 billion in “a leveraged buyout that will largely be funded out of the reserves and cash flow of Indus Towers”. Vodafone may retain a stake of around 10%.
Recent reports have indicated that once Infratel has made its acquisition, KKR is looking to increase its stake in Indus to around 45%.