Vodafone completes €478m sale of Indian tower unit ahead of Idea merger

03 April 2018 | James Pearce

Vodafone has completed the sale of its Indian tower unit to ATC Telecom Infrastructure Private Limited (ATC) in a deal worth INR 38.5 billion (€478 million).

The sale of its tower arm was agreed as part of Vodafone’s agreement to merge its Indian operation with rival Idea Cellular – a merger that will make a new market leader in the country.

ATC, which is a majority-owned subsidiary of American Tower, will also snap up Idea’s 8,886-strong tower business in a separate deal expected to be completed in the first half of this calendar year.

The Vodafone deal sees ATC add 10,200 towers in India, significantly boosting its footprint in the country. It already owned more than 58,000 towers following the acquisition of Viom Networks in October 2015.

Overall, the acquisition of both towercos will be worth around $1.2 billion and is being carried out through Viom, of which it owns a 51% stake. The deal sees Viom renamed as ATC.

“We are pleased to acquire this portfolio, which will complement our existing footprint and help us serve our tenants in India as they expand 4G services in the coming years,” said Amit Sharma, American Tower’s EVP and president, Asia. 

Idea Cellular and Vodafone India decided in March 2017 to merge their operations, and the deal is expected to be completed in early 2018 – though other Indian mergers have become unravelled before completion. 

The $20 billion+ merger between Vodafone and Idea create the country’s largest operator, with 400 million customers and a market share of over 40%. 

Vodafone and Idea – which is controlled by the Aditya Birla group, a conglomerate with interests from cement to financial services – will eventually own identical stakes in the combined company, after some adjustments over the first four years after completion. 

Vodafone’s merger of its Indian operations with Idea Cellular will not affect the operations of Vodafone Global Services within the country.  The company confirmed that global services will remain with the UK-based Vodafone Group. 

Also excluded from the deal are stakes in Indus Towers, which was set up in 2007 and provides cell towers to Vodafone, Idea and rival operator Bharti Airtel. 

The deal has already overcome a number of regulatory hurdles – including approval from the Indian National Company Law Tribunal in January – and follows a seismic shift in the Indian market that includes the sale of Reliance Communication’s mobile business to rival Reliance Jio. Rumours at the end of March even claimed RCom could offload its remaining telecoms assets including international arm Global Cloud Xchange to Russian industrial group Sistema.

It was the entry of Jio into the market in September 2016 that forced a rapid consolidation and a number asset sales in the Indian market. Operators began to see their margins decline rapidly as they tried to compete with Jio, who offered a launch deal including free voice calls and data at 50 rupees ($0.75) per gigabyte.

In 2014 there were 13 operators in the business in India, from Bharti Airtel with 22.53% of the market down to Quadrant with 0.24%, but recent consolidation means soon there will be just four or five.