ATC eyes India entry with 51% stake buy in Viom for Rs 20,000 cr

Post the deal, ATC will continue to get tower leasing contracts from TTSL on a preferential basis. All parties concerned declined to comment on the matter.

By: ENS Economic Bureau | New Delhi | Published: October 21, 2015 1:11:32 am

In one of the biggest deal in the telecom tower space, US-based American Tower Corporation (ATC), which currently has a minuscule presence in the country, will be acquiring majority 51 per cent stake in Viom Networks, a joint venture between Tata Teleservices (TTSL) and Quippo (part of the Srei Group). The enterprise value of the deal is Rs 19,000-20,000 crore, which includes debt of around Rs 6,500 crore.

Sources said the deal announcement is expected on Wednesday. It will be structured in such a way that ATC, which currently has 13,169 towers with one of the lowest tenancy ratios of 1.90, will acquire the majority stake along with management control. Viom, formed in 2009, currently has TTSL as the majority owner with a 54 per cent stake, and the Srei Group holding 18.5 per cent. PE players like SBI Macquarie, Funderburk Mauritius, IDFC Infra Fund and GIC (Indivest) together hold most of the balance.

Though TTSL has the majority stake, management control is with the Srei Group. After the deal, Srei will exit the venture while TTSL will retain a stake of 30 per cent and 40 per cent. The balance 10-15 per cent stake will be held by the PE players where also some like Funderburk Mauritius are likely to exit as their 7-year gestation period is over.

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Post the deal, ATC will continue to get tower leasing contracts from TTSL on a preferential basis. All parties concerned declined to comment on the matter.

There are eight major players in the towers business in the country with the three-way venture between Bharti Airtel, Vodafone and Idea Cellular being the largest with 115,942 towers with a tenancy ratio of 2.19. Viom currently is at number four position after state-owned BSNL and Reliance Infratel, with 42,600 towers. An additional 1,000 towers are under construction. The company has the best tenancy ratio at 2.35.

Following the Viom Networks-ATC deal, the combined entity’s total number of towers will stand at 55,769 catapulting it to number three position.

Currently, Viom’s customer market share stands at 11.30 per cent and revenue market share at 14.80 per cent, while the same for ATC are at 3.49 per cent and 3.7 per cent.

Prospects for tower companies had brightened after the grant of licences to 8-9 players in 2008 by the then telecom minister A Raja. This led a number of overseas tower firms set shop in the country as well some domestic players foraying into the business. However, the cancellation of these licences in January 2012 had made viability of players with less towers difficult.

However, in recent times, with consolidation in the sector and more auction of spectrum and telcos foraying into newer services like 4G, companies like ATC are again trying to build up scale. The entry of Reliance Jio may also be one of the reason as the company, apart from building its own towers, is also entering into sharing arrangement

with others. The tower scenario is such in the country today that most big firms with a high tenancy ration have a mobile operator as a shareholder. FE

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