ATC exits Indian market: American Tower Corporation has announced a significant move in its India operations, finalising a deal to sell its business to Brookfield Asset Management for a substantial $2.5 billion. The transaction comes after earlier reports hinted at American Tower's exploration of options for its Indian unit. This move will make Brookfield overtake Indus Towers to become India's largest operator of telecom towers.

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

American Tower had been actively exploring options for its Indian unit, considering the sale of a majority stake or even a complete exit from the market. Reports indicate discussions with other potential buyers, including Stonepeak Partners, Macquarie, and KKR. However, Brookfield emerged as the final suitor, clinching the deal for $2.5 billion.

Challenges in negotiations and valuations

Initially, American Tower was open to selling a 50 per cent stake in its Indian unit, but the lack of buyer interest forced the company to reconsider and seek a complete exit. Valuations became a critical point of contention, with American Tower initially aiming for an enterprise value upwards of $4 billion for its Indian unit. However, potential buyers, including Brookfield, were reportedly reluctant to meet this price, negotiating for a valuation between $2.8-3.0 billion.

Industry dynamics and financial considerations

American Tower's decision to exit the Indian market comes at a time of significant consolidation in India's telecom industry. The financial challenges faced by Vodafone Idea, the tower company's largest customer in India, and increased competition from Reliance Jio and Bharti Airtel, have added complexity to negotiations. Despite the uncertainties, American Tower's strong tower assets portfolio, totaling 76,826 towers as of December 2022, remained an attractive proposition for potential buyers.

Strategic move amid industry shifts

The deal between American Tower and Brookfield marks a strategic move for both companies amidst evolving industry dynamics. The $2.5 billion transaction reflects American Tower's commitment to optimising its portfolio, while Brookfield gains a significant foothold in India's telecom infrastructure sector. The success of the sale could provide American Tower with essential funds for future expansion, and the industry will be closely watching the developments leading up to the closure of the deal in the second half of 2024.