American Tower Corp to buy 51% stake in Viom Networks for Rs 7,600 crore

New Delhi: In a largest foreign direct investment in telecom sector this fiscal, US-based American Tower Corp has agreed to buy a majority stake in telecom tower firm Viom Networks for Rs 7,635 crore in an all-cash deal.

American Tower Corporation (ATC) will buy 51 percent stake in Viom, which owns and operates about 42,200 towers and has another 1,000 mobile phone masts under construction, from Tata Teleservices Ltd and SREI Infrastructure Finance.

"Under the agreement, American Tower may acquire or be required to acquire all or a portion of the remaining 49 percent ownership stake in Viom," it said in a statement.

Also, as a pre-condition for the deal, ATC's existing 14,000 telecom mobile masts will be merged with Viom.

This will result "in certain ownership adjustments," the statement said without elaborating.

Tata Teleservices Ltd owns 54 percent of Viom, with Kolkata-based SREI Group of Kanoria family holding about 18 percent with management control. Singapore state investor GIC, Macquarie SBI Infrastructure Fund, Oman Investment Fund and India's IDFC Private Equity are other investors in the company.

ATC will buy all of SREI's 18.50 percent stake and will also acquire stake from other shareholders.

"Tata Teleservices stake will come down to about 34 percent from current 54 percent now and further it would get reduced to 26 percent after ATC merges its Indian business with Viom," said Sunil Kanoria Vice-Chairman of Srei Infrastructure Finance.

IDFC's private equity division will bring down its holding to 3.2 percent, while private equity fund SBI-Macquarie will retain its 11 percent stake.

Viom was formed in 2009 as result of merger of mobile towers of Tata Teleservices and Quippo Telecom -- a unit under Srei Group.

During the quarter ended June 30, Viom generated around Rs

5,000 crore in rental and management revenue and approximately Rs 2,100 crore in gross margin.

However, Viom had Rs 5,800 crore of debt outstanding as of September 30.

"The proposed transaction is a testament to the accomplishment of Viom's 1,400 strong team who orchestrated the company's turnaround in financial year 2012-13, during a difficult industry environment. This is potentially among the top-5 inbound M&A deals in India in the past five year," Viom Network's CEO Syed Safawi said.

Viom has been registering profit since 2012-13 period and posted profit after tax of around Rs 170 crore at the end of 2014-15.

The transaction is subject to customary closing conditions and regulatory approval and is expected to close in mid-2016.

On completion of the deal SREI Infrastructure Finance, which controls management of Viom, Funderburk Mauritius, which holds 6.39 percent, Indvest PTE which has 2.35 percent and other investors holding 1.32 percent stake in the company will completely exit.

SBI Macquarie stake of 11.14 percent will stay intact while IDFC Infra Fund stake of 6.23 percent will get diluted to 3.18 percent.

The transaction is subject to customary closing conditions and regulatory approval, and is expected to close in mid-2016.

"Through our joint ownership with the Tata Group of over 56,000 towers, American Tower will be strategically positioned to benefit from the leasing revenue growth opportunities that will come from the accelerating deployment of 3G and 4G technologies by all of the wireless carriers in the market," ATC Executive Vice President Amit Sharma said.