Twist in mega $2 billion plus ATC India sale: Canada's Brookfield now lead suitor

In October, ATC informed the US Securities and Exchange Commission (SEC) that it has taken a $322 million goodwill impairment charge for its India unit in the quarter ended September 2023

Top Canadian investor Brookfield Asset Management is in the final stages of negotiations to acquire a 100 percent stake in ATC India, a unit of the US-based telecom tower major American Towers Corporation ( ATC), multiple industry sources told Moneycontrol.

Media reports earlier in the year had named US private equity firm I Squared Capital as a front-runner to acquire ATC's India unit and the new development represents a twist in the ongoing strategic review process for the India tower company.

If the discussions fructify into an eventual transaction, it would be the second big-bang transaction in this segment for Brookfield, following its $3.66 billion buyout of Reliance Jio's telecom tower assets in 2019. Brookfield has a telecom tower InvIT (infrastructure investment trust) Data Infrastructure Trust.

"Brookfield has edged ahead of other suitors and is now in the pole position to pick up a controlling stake in the Indian unit of ATC. The deal is likely to be signed soon and an official announcement can be expected shortly," said one of the persons familiar with the discussions.

The enterprise value of this proposed buyout by Brookfield is expected to be upwards of $2 billion, said a second person.

Two other persons confirmed that talks between both parties had reached an advanced stage.

"Brookfield is willing to take bets and deploy large amounts of money in a sector they know well. Investment bank Citi is the sell side advisor on this deal in the works, " one of them elaborated.

All four persons above spoke to Moneycontrol on the condition of anonymity.

Brookfield and Citi declined to comment. Moneycontrol could not elicit an immediate email response from ATC at the time of publishing this article and has sent reminders. This story will be updated as soon as we hear from the firm.

Tough Times for ATC India

In October, ATC informed the US Securities and Exchange Commission (SEC) that it has taken a $322 million goodwill impairment charge for its India unit in the quarter ended September 2023, amid a challenging business environment due to a delay in payments from one of its main vendors Vodafone India.

“The company performed an interim quantitative goodwill impairment test as of September 30, 2023, using information obtained from third parties to compare the fair value of the India reporting unit to its carrying amount, including goodwill. The result indicated that the carrying amount of the company's India reporting unit exceeded its estimated fair value… as a result, the company recorded a goodwill impairment charge of $322 million for the three and nine months ended September 30," the SEC disclosure said.

“We are making significant progress on the strategic review of our India business. As we are in the final stages of this process, we remain committed to communicating the outcome to our shareholders before the end of the year, consistent with our past messaging,” Rod Smith, executive vice-president, chief financial officer, and treasurer of ATC, said in a call with analysts in late 2023.

ATC Presence 

Since launching operations in India in 2007, ATC India’s portfolio has expanded to approximately 75,000 towers. The firm has a national presence and services all major telecom service providers in the country.

According to its website, "ATC builds telecom sites, provides colocation sites and In-Building passive infrastructure sharing opportunities for all of India’s Mobile Network Operators (MNO). ATC India has also developed a host of sophisticated processes and systems that help customers establish their communication network with speed and ease. These processes and systems are specially designed to maximize collocation opportunities on its sites and help MNO expand their communication networks with cost savings."

Globally, ATC is a leading independent owner, operator and developer of wireless and broadcast communication real estate. Its global portfolio includes approximately 221,000 communications sites. Headquartered in Boston, Massachusetts, ATC has offices across the United States and in 25 countries and 6 continents.

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