Brookfield to acquire ATC India in $2.5bn deal

March 2024 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

March 2024 Issue

Brookfield Asset Management has agreed to acquire American Tower Corp’s (ATC’s) Indian operations – ATC India – in a deal worth $2.5bn. Upon completion of the acquisition Brookfield will overtake Indus Towers and become the largest operator of telecom towers in India. The transaction will also include a ticking fee that accrues from 1 October 2023, to the date of closing.

The transaction, which is subject to customary closing conditions including government and regulatory approvals, is expected to close in the second half of 2024.

The all-cash deal, one of the largest telecom infrastructure deals ever agreed in the country, will be Brookfield’s third telecom acquisition in India over the last four years and marks American Tower’s exit from the country. The company had previously announced a strategic review of its operations in India. Proceeds from the transaction are expected to be used to pay down some of ATC’s existing debt load. ATC will exit India after nearly 17 years. Its fortunes have floundered due to the struggles of its top client Vodafone Idea and it recently wrote down the value of the business by $322m.

Under the terms of the deal, American Tower will retain the full economic benefit associated with the optionally converted debentures issued by Vodafone Idea and will be entitled to receive future payments related to existing ATC India receivables. American Tower Asia Pacific will still own towers in Bangladesh and the Philippines.

According to a statement announcing the deal, ATC has signed a definitive agreement with Data Infrastructure Trust (DIT), an infrastructure investment trust sponsored by an affiliate of Brookfield Asset Management pursuant to which DIT will acquire 100 percent of the equity interests in American Tower’s operations in India. At present, DIT houses Brookfield’s telecom tower businesses in India through Summit Digitel and Crest Digitel.

“We look forward to expanding and enhancing our existing telecom tower portfolio in India, which enables a broader array of solutions for our customers and partners,” said Arpit Agrawal, managing director, head of infrastructure, India & Middle East, at Brookfield. “Through strategic acquisitions like ATC India, we remain deeply committed to empowering digital connectivity and transforming the telecom infrastructure landscape across the region.”

Brookfield bested another US infrastructure investment group, I Squared Capital and infrastructure fund Stonepeak Partners to acquire part of the ATC business. I Squared Capital announced it had signed exclusivity with ATC late last year to finalise the terms of acquiring a stake of around 65 percent in ATC Telecom Infrastructure Pvt Ltd, at an enterprise value of $1.5-$1.75bn. However, the deal dragged on long enough to allow Brookfield to return to the negotiation process with an improved offer.

Brookfield and Stonepeak dropped their interest in the business after their initial rounds of negotiations, most notably because ATC had originally planned to divest 50 to 100 percent of its India operations, but potential suitors were not keen on a co-control model, forcing ATC to revise its plan and agree on relinquishing majority ownership.

As part of its push into the Indian telecoms space, Brookfield has been particularly active in recent years. In 2022, Brookfield acquired a portfolio of 5000 indoor business solution sites and small cell sites, which advances the rollout of 5G and enables telecom operators to extend their coverage capacity in difficult-to-access and dense areas. The company also acquired a portfolio of around 175,000 towers in 2020 from a division of Reliance Industries Ltd. ATC India has around 78,000 sites across the country. In India, Brookfield has approximately $25bn in assets under management across infrastructure, real estate, renewable power & transition and private equity.

Richard Summerfield