Essar sells tower biz to American Tower for Rs 2,000 cr

Diversified group Essar is selling its telecom tower business -- Essar Telecom Infrastructure -- to American Tower for about Rs 2,000 crore in an all-cash deal.

Transcend Infrastructure, an affiliate of American Tower, today said it has entered into a definitive share purchase agreement with three Indian companies of the Essar Group to acquire substantially the entire issued share capital of Essar Telecom Infrastructure (ETIPL) in an all cash deal.

The transaction values ETIPL at an enterprise value of approximately Rs 2,000 crore, and is subject to certain post closing adjustments, TIL said in a statement.

The transaction is subject to certain pre-completion requirements and is expected to be completed in three months.

Earlier in the day, Essar Securities, the securities brokerage unit of Essar Group, said in a BSE filing that it has agreed to sell its stake in the group’s mobile towers unit to American Tower Co for Rs 49 crore. Transcend Infrastructure acquired the stake of Essar Securities.

Essar Group Director (Strategy and M&A) Vikash Saraf said, "ETIPL is a one of the pioneers in the wireless tower outsourcing business and has built a substantial portfolio of attractive and well located towers, a marquee client base and one of the highest tenancy ratios in the business. Going forward, the company under the aegis of ATC can look forward to significant growth and consolidating its position".

American Tower Executive Vice President and President (Asia) Amit Sharma said, "The addition of ETIPL to American Tower’s existing Indian operations will significantly strengthen our ability to serve our telecom customers; this will help them in enhancing their network coverage and in launching new technologies like 3G and WIMAX."

ETIPL is one of India’s largest independent tower companies with a portfolio of approximately 4,450 wireless tower sites, including a number of towers under construction. They operate across 12 of the 22 telecom circles in India and have an industry leading tenancy ratio of 1.8x.

Barclays Capital is acting as financial adviser to Essar in connection with the transaction.

The sale will give Essar, which operates as a 33 per cent partner with Vodafone as a mobile service provider, funds to bid for 3G mobile licences taking place on April 9.

Indian tower and mobile operators merging or selling assets as growth slows and competition intensifies in the market. GTL Infrastructure, India’s largest independent operator of mobile-phone towers, last month agreed to buy 17,500 transmission sites from mobile operator Aircel for Rs 8,400 crore to help it double its network in India.

For American Tower, this is the third acquisition in India in less than 12 months aims to drive international growth in emerging markets, including India.