American Towers Corporation, the US-based telecom tower giant, is set to sell its loss-making operations in India by the end of the month at an enterprise valuation of up to $2.2 billion.
I Squared Capital, the US-based infrastructure private equity firm, is leading the race to buy the telecom tower company that has consistently fallen in value in recent years, a banking source said. I Squared Capital declined to comment.
In the September quarter, ATC recorded $322 million in goodwill impairments related to its operations in India. After the impairment, the book value of the India operations is approximately $2.2 billion, based on internal analysis of the impairment charges, driven cash flow and cost of capital, company officials said at the third-quarter earnings conference call.
“We are making significant progress in the strategic review of our operations in India. As we are in the final stages of this process, we remain committed to communicating the outcome to our shareholders before year-end, consistent with our past messaging,” said Rod Smith, executive vice president, chief financial officer and treasurer of ATC. said recently in a conference call with analysts.
ATC India is the third largest independent telecom tower company in India, both in terms of number of towers and tenants, and has a significant presence across telecom circles. The company has acquired several towers to expand its footprint in India and market share. ATC India’s portfolio has expanded to over 77,000 locations and commands a telecom tower market share of around 17 percent.
In FY2023, the company exercised a call option on its non-convertible debentures (NCD) of Rs 4,200 crore and paid off the entire amount along with interest.
In India, the company is facing delays in payments from Vodafone India, which has increased the company’s working capital needs. The company has subscribed to Optionally Convertible Debentures (OCDs) issued by VIL for an amount of Rs 1,600 crore, part of which was used to settle past outstanding debts of the customer. The company’s rental dependence on VIL stood at approximately 44 percent as of December 31, 2022, prompting a review of its Indian operations by ATC.
In FY18, the company had raised debt to finance the acquisition of Vodafone and Idea’s tower assets. This increased the company’s influence. The company was initially incorporated in March 2004 as Tata Tele Info, a 100 percent subsidiary of TTSL. Over the years, the company has witnessed changes in shareholdings and has therefore changed its name. From now on, the interest is fully owned by ATC Asia Pacific Pte, a subsidiary of ATC from the United States. For the nine months ended December 2022, the company reported an operating profit of Rs 6,211 crore and a loss of Rs 2,220 crore, according to a Care Ratings statement.