American Tower, Tata Teleservices and SREI Infrastructure Finance along with minority shareholders, have entered into a definitive agreement pursuant to which American Tower will acquire a 51 percent controlling interest in Viom Networks.
Viom currently owns and operates approximately 42,200 wireless communications towers and 200 indoor distributed antenna systems across India. The total cash consideration will be Rs 7,600 crore.
At closing, Tata Teleservices will retain a part of its holding, with Macquarie SBI Infrastructure Investments, SBI Macquarie Infrastructure Trust and IDFC Private Equity Fund III retaining certain interests. Under the agreement, American Tower may acquire or be required to acquire all or a portion of the remaining 49 percent ownership stake in Viom.
Viom Networks Equity Structure
Pre-Transaction Viom Networks Equity Structure
TTSL – 54.31%
SBI Macquarie – 11.14%
SREI – 18.26%
Funderburk Mauritius – 6.39%
IDFC Infra Fund – 6.23%
Indivest – 2.35%
Others – 1.32%
Post-Transaction Viom Networks Equity Structure
American Tower – 51%
TTSL – 35.68%
SBI Macquarie – 11.14%
IDFC Infra Fund – 3.18%
Additionally, the parties have agreed that, post-closing, American Tower’s existing Indian portfolio of approximately 14,000 towers will be merged with Viom, resulting in certain ownership adjustments.
“With a population of nearly 1.3 billion people, rapidly growing smartphone penetration and limited fixed line infrastructure, India’s vibrant wireless industry is poised for a sustained period of network investment,” said James D Taiclet, American Tower’s chairman, president and CEO.
“ATC India’s greatly expanded portfolio of towers will enable us to play a key role in providing the communications real estate essential to the deployment of advanced wireless technologies throughout the country and to support the Indian government’s Digital India Initiative,” added Taiclet.
Commenting on the transaction, Ishaat Hussain, director, Tata Teleservices said, “This partnership with ATC presents an opportunity for Tata Teleservices to leverage an enhanced infrastructure portfolio to better address the rapidly expanding market for next generation data services in India.”
Sunil Kanoria, chairman and managing director, Viom and vice chairman, SREI Infrastructure Finance said, “We are pleased to have found a new management team for Viom, and believe that ATC is well positioned to continue to optimize these assets given its proven track record of success. From SREI’s perspective, the divestment of Viom will have a multi-fold impact for SREI improving profitability and will be accretive for both shareholders and SREI.”
American Tower anticipates consolidating the full financial results for Viom after the closing of the transaction.
During the quarter ended June 30, 2015, Viom generated the following annualized results: approximately Rs 5,000 crore in rental and management revenue and approximately Rs 2,100 crore in gross margin. In addition, as of September 30, 2015, Viom had approximately Rs 5,800 crore of outstanding debt. American Tower expects the transaction to be immediately accretive to AFFO per share.
Amit Sharma, American Tower’s executive vice president and president, Asia, American Tower said, “Through our joint ownership with the Tata Group of over 56,000 towers, American Tower will be strategically positioned to benefit from the leasing revenue growth opportunities that will come from the accelerating deployment of 3G and 4G technologies by all of the wireless carriers in the market.”
American Tower intends to finance the transaction in a manner consistent with maintaining its investment grade credit rating. The transaction is subject to customary closing conditions and regulatory approval, and is expected to close in mid-2016.
American Tower utilized Evercore and Kotak Investment Banking as financial advisors and Clifford Chance, AZB & Partners and Luthra & Luthra as legal advisors. Credit Suisse served as exclusive financial advisor to Viom and its shareholders. Cyril Amarchand Mangaldas served as legal advisor to Viom and its primary shareholders.