American Tower Corporation Explores M&A Options in India

American Tower Corporation (ATC), a U.S.-based global provider of mobile telecommunications infrastructure, is exploring the possibility of acquiring India’s largest tower operator, Viom Networks, which is controlled by Tata Teleservices and has over 40,000 towers. ATC currently owns more than 12,000 towers in India and wants to expand its presence there.

As of year-end 2013, ATC had almost 28,000 towers in the U.S. and over 39,000 in 12 international markets. Its desired expansion into the Indian market could more than double the number of ATC’s towers outside of the U.S. India has the world’s fastest growing smartphone market due in part to the size of the country’s population and also because of the country’s development potential, both in terms of devices and infrastructure. Year-over-year smartphone adoption in India increased by 84 percent in Q2 2014, and further adoption seems very likely, as 71 percent of the market still uses feature phones. Furthermore, rural India still lacks strong network infrastructure.

ATC is venturing that in addition to operators upgrading existing infrastructure—as Bharti Airtel and Aircel did when they launched 4G services in some areas in India—there will also be a need for new towers as several of the country’s telecom operators start to show signs of expansion. Reliance Jio, which will launch 4G service across India early in 2015 as a broadband wireless access license holder, will need to have a large number of new towers built as opposed to upgrading existing infrastructure. ATC hopes Reliance Jio’s 4G launch will induce India’s other MNOs to accelerate their 4G service rollouts, which up until now have been proceeding at a sluggish pace. As 4G adoption becomes more widespread in India, data demand will increase. To satisfy customers’ needs, all of the country’s operators will need to add more towers to their networks in addition to upgrading existing sites. While many pieces of the puzzle, including tower purchases by Indian operators, need to fall into place for ATC to recoup its investment in the country, it appears that the timing is good for the infrastructure provider and that India’s mobile operators will also benefit from ATC’s move.

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:  http://www.tarifica.com/TarificaAlert.aspx