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American Tower Corp acquires 51% stake in Viom Networks

Mobile tower

American Tower Corporation (ATC) has acquired 51% stake in Viom Networks, a joint venture between Tata Teleservices (TTSL) and Quippo (part of the Srei Group), reports Voicendata. The deal is pegged to be at Rs 19,000- 20,000 crore, including a debt of Rs 6,500 crore. ATC will continue to get tower leasing contracts from TTSL on a preferential basis, and the combined entity will own 55,769 towers. The transaction is expected to close in mind 2016.

According to an Indian Express report, Viom has a customer market share of 11.30% and a revenue market share of 14.80%, while ATC has 3.49% and 3.7% respectively. For quarter ended June 30, Viom generated ~ $770 million in rental and management revenue and $323 million in gross margin. Post the deal, ATC’s 14,000 Indian towers will be merged with Viom. ATC will provide communications infrastructure for advanced wireless technologies (3G and 4G) throughout India.

Viom was formed in 2009, and TTSL owned a majority stake of 54%, Srei Group held 18.5%, while the rest was owned together by SBI Macquarie, Funderburk Mauritius, IDFC Infra Fund and GIC (Indivest). Srei held management control of Viom and will exit the venture selling all of its 18.5% to ATC. GIC Investments and Oman Investment Authority which held single digit stakes will also exit the company. TTSL will lower its stake to 30%, IDFC Infra Fund to 3.2%, while SBI Macquire will retain its 11% stake.

In March last year, Reliance Jio Infocomm inked a tower infrastructure sharing pact with Viom Networks, where Reliance Jio would be using Viom Networks’ pan India passive telecom infrastructure comprising over 42,000 telecom towers. The deal period or the financial terms of the partnership were not disclosed.

NTT Docomo purchase offer
In July, Tata Sons offered to buy Japanese telecom player NTT Docomo’s stake in TTSL for Rs 23.34 a share or at around Rs 11,000 crore, made on the basis of a fair market value determined on June 30, 2014. Earlier in March, the Reserve Bank of India (RBI) had rejected Tata Sons’ offer to buy back Docomo’s shares at the pre-agreed valuation of Rs 58 a share (~Rs 27,000 crore for the stake).

TTSL financials
Tata Teleservices Limited (TTSL) had reported net loss of ¥85,026 million (Rs 4,887 crore) for the year ended March 31, 2014 (FY14), an increase from ¥72,301 million loss (Rs 4,155 crore) in the previous year FY13, but an improvement from ¥95,813 million (Rs 5,506 crore) loss in FY12. It’s worth noting that TTSL is an unlisted company unlike its sister company Tata Teleservices Maharashtra Limited (TTML) which is listed on BSE. While TTML is operational only in Goa, Maharashtra and Mumbai circles, it along with TTSL provides mobile services under the Tata DOCOMO brand in the country.

TTSL’s spectrum wins
In March, Tata Teleservices won 800 MHz spectrum in Andhra Pradesh, Delhi, Haryana, Maharashtra and Mumbai, 11.07 MHz of 800 MHz spectrum for Rs 7,220.05 crore and total spectrum 23.67 MHz for Rs 10,101.33 crore. Note that Tata Teleservices had been disqualified from bidding for new spectrum as they had shown negative net worth of Rs 7,192.60 crore.

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