ATC now looks to sell majority, open to 100% sale and exit India, revives talks with Brookfield

American Tower Corp (ATC) is now open to selling a majority stake in its wholly owned Indian unit, or offering even up to 100% ownership and exiting the country, after its recent efforts to sell only a 50% stake failed to find any takers.

The US tower company is learnt to have re-engaged with Canada’s Brookfield, which is evaluating a full buyout, people with knowledge of the matter said. It has also held separate discussions with US infrastructure fund Stonepeak Partners and tapped Macquarie and KKR & Co through its advisors, though discussions with the latter two are believed to have been lukewarm, these people added.

Stonepeak is a stakeholder in ATC’s US data-centre business. However, the New York-headquartered fund, with $55 billion of assets under management, does not have an India presence. It had backed wireless infrastructure ventures like Vertical Bridge and Globe Telecom Towers in the Philippines among several other digital and telecommunications assets. It is not clear yet if Stonepeak is seeking a full 100% acquisition or a majority control.


Boston-based ATC’s discussions with Brookfield, which already owns Summit Digitel (that houses the telecom towers acquired from Reliance Jio), is believed to have been progressing. Brookfield is only keen on a 100% acquisition of ATC Telecom Infrastructure Pvt Ltd (ATC TIPL), however valuations remain a sticky point still between the two.

Senior executives, lawyers and consultants aware of the discussions said ATC is looking for an enterprise value upwards of $4 billion for its Indian unit, largely linked to its strong India tower assets portfolio — 76,826 towers as of December 2022. On the other hand, the suitors are unwilling to pay any control premium and are negotiating for a $2.8-3.0 billion valuation, worried about sustainability of the tenancy revenue inflows in future, given the continuing financial struggles of Vodafone Idea (Vi), ATC’s biggest customer in India.

ATC’s initial plans to sell a 50% stake in its Indian unit implied co-control with a potential equal partner. But lukewarm buyer appetite appears to have induced the US tower company to change the strategy swiftly.

“ATC is unwilling to price its India towers below $50,000 apiece, while a potential buyer like Brookfield isn’t convinced if it can recover its money from those towers via steady tenancy revenues amid key customer Vi's grim financials,” one of the people cited told ET.

He added that discussions were stuck around valuations as any bulk acquisition of tower assets without assured long-term tenancy revenue would pile up costs for a potential buyer.

Brookfield and ATC could not be reached for comment, Stonepeak declined to comment.

Over the years, ATC had made big bets in India, expanding its towers portfolio aggressively through acquisitions and became the third largest tower infrastructure provider in the country, behind Indus and Brookfield. “Most of their acquisition has been done at peak valuation and today their value has significantly diminished. It’s purely a market where terms are dictated by the tenants, that is the telco. And in ATC’s case, the added complexity is how does one price in the Vi risk,” a suitor who was approached initially said on the condition of anonymity.

In a February 2023 filing with the US Securities and Exchange Commission, ATC said it was exploring strategic alternatives, including the sale of an equity stake in its India operation to one or more private investors amid a challenging business environment. This, after its largest India customer, Vi, had said in early 2023 that it would not resume full payments of what it owed ATC.

The US tower company has already taken a $411.6 million impairment charge due to Vi’s partial payments. In its annual report for 2022, the company warned of more potential payment shortfalls by Vi, a scenario that could lead it to periodically evaluate the carrying value of its Indian assets, possibly resulting in more impairment expenses.

A tower sector veteran aware of ATC’s stake sale talks said commanding a $4 billion valuation for its India unit won’t be easy, especially when the market capitalisation of a bigger tower company like Indus — which has nearly 1,90,000 towers — has plunged to around Rs 38,537 crore ($4.7 billion) from around Rs 53,670 crore ($6.55 billion) in August 2022. Indus’s financials too have taken a hit amid customer Vi’s inability to clear its dues. Vi accounts for more than 40% of Indus’s revenue.

Rapid consolidation in telecom coupled with Vi’s continuing inability to clear contractual dues has posed big challenges for tower companies.

Analysts said the presence of two large pan-India tower infrastructure providers in Indus and Brookfield that can easily meet the immediate 5G network expansion needs of India’s top two telcos – Jio and Airtel – could also make an ATC stake sale challenging in the near term, especially with cash-strapped Vi unlikely to recover its stride anytime soon.

In February, Vi had allotted optionally convertible debentures worth Rs 1,600 crore to ATC TIPL against its dues. Vi owes ATC an estimated Rs 2,000 crore.