American Towers set to sell loss-making India ops for $2.2 billion

I Squared Capital leading race to buy 77,000 towers

US-based telecom tower major American Towers Corporation (ATC) is close to selling its loss-making India operations at an enterprise valuation of up to $2.2 billion by December-end.

I Squared Capital, the US-based infrastructure private equity firm, is leading the race to buy the telecom tower company, which has seen a continuous loss of valuation in the past few years, said a banking source. I Squared Capital declined to comment.

In the September quarter, ATC recorded $322 million in goodwill impairment charges associated with its India business. After the impairment, the book value of the Indian operations is around $2.2 billion based on its internal impairment review analysis, discounted cash flow, and cost of capital, company officials said at the third quarter results conference.

“We are making significant progress on the strategic review of our India business. As we are in the final stages of this process, we remain committed to communicating the outcome to our shareholders before the end of the year, consistent with our past messaging,” Rod Smith, executive vice-president, chief financial officer, and treasurer of ATC, said in a call with analysts recently.

ATC India is the third-largest independent telecom tower company in India, both in terms of the number of towers and tenants, and has a significant presence in all the telecom circles. The company has acquired several towers to increase its footprints in India along with its market share. ATC India’s portfolio has expanded to over 77,000 sites and has cornered a telecom tower market share of around 17 per cent.
 

In the financial year 2023, the company exercised a call option on its Rs 4,200-crore non-convertible debentures (NCDs) and redeemed the entire amount along with interest.

In India, the company is facing delays in payments from Vodafone India (VIL), which has increased the working capital requirements of the business. The company has subscribed to optionally convertible debentures (OCDs) issued by VIL amounting to Rs 1,600 crore, a part of which was utilised to clear the outstanding from the customer. The company’s tenancy dependence on VIL was around 44 per cent as on December 31, 2022, leading to a review of India business by ATC.

In FY2018, the company had raised debt to fund the acquisition of the tower assets of Vodafone and Idea. This increased the company’s leverage. The company was initially incorporated in March 2004 as Tata Tele Info, a 100 per cent subsidiary of Tata Teleservices Limited (TTSL). 
 

Over the years, the company has witnessed changes in shareholding and changed its name accordingly. As of date, its stake is entirely held by ATC Asia Pacific Pte, a subsidiary of ATC of the United States. For the nine months ended December 2022, the company reported operating income of Rs 6,211 crore and a loss of Rs 2,220 crore, according to a statement by CARE Ratings.