Canadian pension fund Caisse de dépôt et Placement du Québec (CDPQ) is in talks with American Tower Corp (ATC) to buy a 50% stake in its Indian unit, according to multiple news reports.
The valuation of the India arm is estimated at $1.5-$2 billion.
On February 23, in a filing to the US Securities and Exchange Commission (SEC), ATC said it’s exploring strategic alternatives, including the sale of an equity stake in its India operation to one or more private investors.
Its largest India customer Vodafone Idea (Vi) had said in early 2023 that it wouldn’t provide all of the payments it owes ATC.
In the filing, ATC said Vi represented roughly 3.2% of its total revenue ($10.71 billion) for the year ended December 31, 2022.
ATC has already taken a $411.6 million impairment charge due to Vi’s partial payments and warned of more such potential charges in the future amid continuing payment concerns at its largest customer in India.
The company had 76,826 towers in its India portfolio as of December 2022.
In 2017, ATC acquired approximately 20,000 towers from Vodafone and Idea Cellular Ltd, for $1.2 billion.
At that time, former ATC CEO Jim Taiclet said: “We expect the addition of these two high-quality portfolios to be highly complementary to our existing assets and to contribute to long-term leasing growth as India’s leading mobile operators accelerate their 4G network deployments.”
Taiclet had been pitching his board of directors on India since 2006 when he said that the country is a vibrant market with low penetration and the country scores high on overall political and economic stability.
Although Taiclet’s acquisitions, over the years, put ATC as one the largest and most successful REIT’s in the world, his bet on India failed after rapid consolidation in telecom and Vi withholding payments.
Warning signs surfaced in 2018 when Tata Teleservices settled with ATC for $320 million following its early exit from 30,000 tower leases
Today, India has just two dominant carriers.