ATC, IDFC Alternatives, Brookfield vying for Idea Cellular, Vodafone tower assets
MUMBAI: American Tower Corp. (ATC), Brookfield Asset Management and IDFC Alternatives have emerged as the front runners for the independent tower assets of Vodafone India and Idea Cellular Ltd in a combined transaction, according to two people with direct knowledge of the development.
The sale of the combined tower assets, pegged at over $1.5 billion in enterprise value, is being negotiated with potential buyers, with a preference for a single buyer for both assets, the people cited above said on condition of anonymity.
Mint reported in February that ATC had emerged as the front-runner to buy the tower assets of Idea Cellular Infrastructure Services (ICIS), a subsidiary of Idea Cellular that operates 11,000 towers.
“However, with Vodafone and Idea announcing their potential merger a month later in March, another 10,000-odd independent towers of Vodafone India has been put on the block too,” said one of the two people cited above, adding, “there are two parallel sale processes being run by Idea and Vodafone with the same set of potential buyers”.
“Both Vodafone and Idea would prefer to sell their respective tower assets to a single buyer,” this person added.
According to the people cited above, ATC has been in negotiations the longest, initially with Idea and then with Vodafone, while Brookfield and IDFC Alternatives entered the fray later.
Private equity fund TPG Capital had also approached Vodafone and Idea with a potential offer, but it is no longer in the race. Incidentally, TPG Capital, along with Tillman Global Holdings, was also in the race to acquire majority control in the tower arm of Reliance Communications Ltd and had entered into an initial agreement to buy the tower assets and other related infrastructure. But the deal was called off later.
Brookfield Asset Management, IDFC Alternatives and TPG Capital declined to comment. An email sent to ATC remained unanswered till press time.
The high interest of private equity funds underlines the growing prominence of large infrastructure and private equity funds in consolidating telecom tower assets.
Brookfield, the Canadian alternative asset manager which signed a deal in December to acquire the towers of Reliance Communications, could end up with more than 30% of the telecom tower market.
Home grown infrastructure fund IDFC Alternatives, which bought a 33% stake in New Silk Route-backed telecom tower firm Ascend Telecom Infrastructure Pvt. Ltd in April this year, has announced plans to add more telecom tower assets to its portfolio.
Mint reported in December that IDFC Alternatives had expressed interest in acquiring a controlling stake in GTL Infrastructure Ltd from the lenders of the debt-laden telecom tower operator.
According to industry experts, growing consolidation among telecom operators and tower companies is also expected to impact the tenancy ratio of tower assets, wherein the largest players are expected to end up with higher tower tenancies, which augur well for yield-seeking long-term funds looking for annuity cash flow generating assets.