American Tower to Buy Controlling Stake in Indian Cell Tower Company
October 21 2015 - 1:17PM
Dow Jones News
By Sean McLain And Chelsey Dulaney
American Tower Corp. said it has agreed to buy a 51% stake in
Indian cell tower owner Viom Networks Ltd. for 76 billion rupees
($1.2 billion) in a move to capitalize on booming smartphone
usage.
Indian telecom provider Tata Teleservices Ltd. will keep part of
its stake in Viom, though the companies didn't specify how much in
a news release. SREI Infrastructure Finance Ltd. will divest its
interest in Viom.
Viom, which owns and operates over 40,000 wireless towers, has
annual rental and management revenue of about 50 billion rupees
($770 million). American Tower, which plans to merge its 14,000
Indian cell towers into Viom after closing, expects the deal to add
to its adjusted funds from operations immediately.
Falling smartphone prices are driving a boom in mobile data
usage as ownership of the devices explodes. Google Inc. and China's
Xiaomi Corp. have chosen India to launch low-cost handsets, and
local upstart Micromax Informatics sells some smartphones for
around $40.
Indian cellular service companies have reported sharp profit
increases fed by rising Internet usage.
But Indian telcos have struggled to build enough towers to keep
pace with the rise in usage. They pay high rental fees to the
Indian government for the bandwidth to offer services. As a result,
companies are saddled with high debt. Spinning off tower assets can
help phone companies pay off debt and concentrate on their core
services.
Earlier this year Vodafone Group PLC's India unit and other
phone companies agreed to pay $17.6 billion for spectrum
rights.
The high fees mean many of these companies have struggled to
come up with the cash to build and upgrade their tower network.
Internet speeds get sluggish during the day, which cellular service
companies say is because they don't have enough bandwidth to run a
more reliable network.
Write to Sean McLain at sean.mclain@wsj.com and Chelsey Dulaney
at Chelsey.Dulaney@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
October 21, 2015 13:02 ET (17:02 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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