Vodafone, Idea to sell standalone tower assets to ATC for $1.2 billion

Vodafone, Idea to sell standalone tower assets to ATC for $1.2 billion

The tower deal will not affect the merger terms of the two companies.

Idea Cellular board has approved the sale of subsidiary Idea Cellular Infrastructure Services Limited (ICISL), its standalone tower business to ATC Telecom for an enterprise value of Rs 4,000 crore.

The deal will make American Tower Corp one of the top players in the tower infrastructure market in India along with Bharti Infratel and Indus Towers.

Both Vodafone India and Idea as customers and ATC TIPL as a mobile network infrastructure provider have agreed to treat each other as long-term preferred partners, subject to existing arrangements. Further, SG&A associated with the assets is expected to be less than Rs 1 billion (approximately $10 million) for the first year.

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American Tower, which agreed to take control of Indian masts operator Viom in 2015 for 76 billion rupees, has been steadily expanding its presence in India - the world's second biggest wireless market with 1.2 billion mobile subscribers. Reliance Jio, in which Ambani has invested $20 billion, launched its services in September. Its offers of free voice calls and data plans, which continued for months, eroded the revenue and profits of competitors such as Idea and Bharti.

"This transaction follows the Vodafone India/Idea merger announcement of March 20, 2017 whereby the parties announced their intention to sell their individual standalone tower businesses to strengthen the balance sheet of the combined business", it said.

Under the merger, the implied enterprise value for Vodafone India would be Rs. 82,800-crore while for Idea, it would be Rs. 72,200-crore. The merger, expected to be completed in 2018, is awaiting various approvals.

The deal, which now awaits various regulatory approvals, is expected to be completed next year around March.