Brookfield to buy ATC India for $2.5 billion, become country's top telecom tower firm
Nandan Mandayam
Thu, January 4, 2024
A telecommunications tower managed by American Tower is seen in Golden
By Nandan Mandayam
(Reuters) -Brookfield Asset Management will buy American Tower Corp's (ATC) loss-making Indian operations for $2.5 billion, it said Friday, becoming the country's largest operator of telecom towers amid booming demand for data and wider use of 5G services.
The acquisition is the biggest of Brookfield's three telecom-related deals in the roughly four years the Canadian company has been present in India, the world's second-largest market by number of subscribers.
ATC, on the other hand, will exit India after nearly 17 years. Its fortunes have floundered due to the struggles of top client Vodafone Idea and it recently wrote down the value of the business by $322 million.
Brookfield, whose so-called anchor client is Reliance Industries' Jio, will be in "a better position to manage the challenge that ATC had with high exposure to Vodafone Idea," said Vivekanand S, an analyst at Ambit Capital Research.
Jio and Vodafone Idea compete with Bharti Airtel in the Indian telecom market where, according to an Ericsson report, the number of 5G subscribers will quadruple by 2027, accounting for 40% of the total base, from 11% in 2023.
Airtel is the anchor client of Indus Towers, the current market leader with roughly 193,000 towers. Brookfield has around 157,000 towers and ATC operates some 77,000 towers.
The presence of Airtel, said Vivekanand, means Brookfield's deal to buy ATC will not threaten Indus Towers.
Indus Towers became India's biggest telecom towers company in late 2020 when it merged with Bharti Infratel, then a unit of Airtel, to form a $14.6-billion giant. Brookfield's latest deal is the largest in the space since then.
Bharti Airtel currently owns about 48% of Indus and Vodafone Idea owns roughly 3%.
Indus's shares rose 5.5% in afternoon trading on Friday, while Bharti Airtel's shares were little changed. ($1 = 83.2150 Indian rupees)
(Reporting by Nandan Mandayam, Yagnoseni Das and Rishabh Jaiswal in Bengaluru; Editing by Rashmi Aich and Savio D'Souza)
American Tower (AMT) to Wrap Up ATC India Operations for $2.5B
Zacks Equity Research
Fri, January 5, 2024
American Tower Corporation AMT recently entered into an agreement with Data Infrastructure Trust (“DIT”), an affiliate of Brookfield Asset Management BAM, to divest 100% of its equity interests in its India-based operations — ATC India. DIT presently houses Brookfield’s telecom tower businesses in India via Summit Digitel and Crest Digitel.
The company’s latest move marks the completion of its earlier announced strategic review of its operations in India.
Based on the exchange rates as of Jan 4, 2024, the total cash proceeds that American Tower will receive at closing aggregate around INR 210 billion or $2.5 billion. The cash proceeds are inclusive of a $2 billion enterprise value on the ATC India operations and a ticking fee that accrues from Oct 1, 2023, to the date of closing. The transaction is expected to materialize in the second half of 2024, subject to customary closing conditions, including government and regulatory approvals.
The proceeds from the deal are expected to be utilized by American Tower to repay its existing debt. In addition, the sum related to the enterprise value assumes the repayment of existing intercompany debt and the repayment, or assumption, of the existing India term loan by DIT.
Pursuantly, the real estate investment trust (REIT) will hold back the full economic benefit associated with the optionally converted debentures issued by Vodafone Idea Limited (“VIL”) and will be entitled to receive future payments related to existing ATC India receivables.
American Tower’s decision to wrap up its ATC India operations comes after VIL, in early 2023, said that it would not be able to resume full payments of the contractual obligations that it owed the company and would instead continue to make partial payments. VIL is American Tower’s largest customer in India and accounted for around 3.2% of its total revenues for the year ended Dec 31, 2022. Finally, in the third quarter of 2023, VIL made full payments of its contractual obligations that were due to American Tower.
With respect to this development, AMT recorded goodwill impairments of $322 million during the nine months ended Sept 30, 2023.
American Tower’s move to reduce its exposure to a challenging business environment in India is likely to be beneficial to its top-line growth in the long run. With a portfolio of roughly 225,000 communications sites worldwide as of Sep 30, 2023, and unmatched geographic diversification of its sites, American Tower remains strategically positioned to capture the incremental demand from global 4G and 5G deployment efforts, growing wireless penetration and spectrum auctions.
Analysts seem bullish on this Zacks Rank #3 (Hold) company. The recent estimate revision trend for 2024 funds from operations (FFO) per share indicates a favorable outlook for the company, with estimates moving marginally northward over the past month.
The company’s shares have appreciated 35% in the past three months compared with its industry’s growth of 19.8%.
Zacks Investment Research
Image Source: Zacks Investment Research
Zacks Equity Research
Fri, January 5, 2024
American Tower Corporation AMT recently entered into an agreement with Data Infrastructure Trust (“DIT”), an affiliate of Brookfield Asset Management BAM, to divest 100% of its equity interests in its India-based operations — ATC India. DIT presently houses Brookfield’s telecom tower businesses in India via Summit Digitel and Crest Digitel.
The company’s latest move marks the completion of its earlier announced strategic review of its operations in India.
Based on the exchange rates as of Jan 4, 2024, the total cash proceeds that American Tower will receive at closing aggregate around INR 210 billion or $2.5 billion. The cash proceeds are inclusive of a $2 billion enterprise value on the ATC India operations and a ticking fee that accrues from Oct 1, 2023, to the date of closing. The transaction is expected to materialize in the second half of 2024, subject to customary closing conditions, including government and regulatory approvals.
The proceeds from the deal are expected to be utilized by American Tower to repay its existing debt. In addition, the sum related to the enterprise value assumes the repayment of existing intercompany debt and the repayment, or assumption, of the existing India term loan by DIT.
Pursuantly, the real estate investment trust (REIT) will hold back the full economic benefit associated with the optionally converted debentures issued by Vodafone Idea Limited (“VIL”) and will be entitled to receive future payments related to existing ATC India receivables.
American Tower’s decision to wrap up its ATC India operations comes after VIL, in early 2023, said that it would not be able to resume full payments of the contractual obligations that it owed the company and would instead continue to make partial payments. VIL is American Tower’s largest customer in India and accounted for around 3.2% of its total revenues for the year ended Dec 31, 2022. Finally, in the third quarter of 2023, VIL made full payments of its contractual obligations that were due to American Tower.
With respect to this development, AMT recorded goodwill impairments of $322 million during the nine months ended Sept 30, 2023.
American Tower’s move to reduce its exposure to a challenging business environment in India is likely to be beneficial to its top-line growth in the long run. With a portfolio of roughly 225,000 communications sites worldwide as of Sep 30, 2023, and unmatched geographic diversification of its sites, American Tower remains strategically positioned to capture the incremental demand from global 4G and 5G deployment efforts, growing wireless penetration and spectrum auctions.
Analysts seem bullish on this Zacks Rank #3 (Hold) company. The recent estimate revision trend for 2024 funds from operations (FFO) per share indicates a favorable outlook for the company, with estimates moving marginally northward over the past month.
The company’s shares have appreciated 35% in the past three months compared with its industry’s growth of 19.8%.
Zacks Investment Research
Image Source: Zacks Investment Research
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