American Tower to buy combined assets of Vodafone India, Idea Cellular

American Tower is plunking down about $1.2 billion for roughly 20,000 towers in India, boosting its footprint in the world’s second-largest cellular market. Those towers represent the combined tower assets of Vodafone India and Idea Cellular, which have been in the process of a merger of their operations due to competitive pressure from the success of low-cost service provider Reliance Jio.

The towers have a combined tenancy ratio of 1.65x as of June 30, the companies reported. The deal will mean that ATC’s majority-owned subsidiary in India, also known as ATC Telecom Infrastructure Private Limited or ATC TIPL, will have both Vodafone India and Idea as customers, and the three companies “have agreed to treat each other as long-term preferred partners” and “will work together to further the expansion of high speed mobile networks in India.”

“We expect the addition of these two high quality portfolios to be highly complementary to our existing assets and to contribute to long-term leasing growth as India’s leading mobile operators accelerate their 4G network deployments,” said Jim Taiclet, CEO of American Tower.

Vodafone said that once its India unit and Idea have completed their merger, about 6,300 co-located tenancies will be trimmed to single tenancies over two years; the agreement allows this without exit penalties. The sale of the towers to ATC TIPL is expected to close in the first half of 2018; if the tower sale goes through before the merger of Vodafone India and Idea, Vodfone India will receive $592 million and Idea will be paid $615 million.

The sale of Vodafone India’s towers doesn’t take Vodafone out of the tower market in that country, however. Vodafone still has a 42% stake stake in Indus Towers, which is the world’s largest tower company with a portfolio of more than 120,000 towers; that stake was not part of the Vodafone India/Idea merger deal.

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