Kolkata | Mumbai: Canadian pension fund Caisse de dépôt et Placement du Québec (CDPQ<\/a>) is in talks with American Tower Corp<\/a> (ATC<\/a>) to buy a 50% stake in its Indian unit, according to people with knowledge of the matter.
Both CDPQ and KKR<\/a> & Co had earlier submitted non-binding bids, but the latter is believed to have gone slow while the Canadian investor has initiated detailed diligence work, said the people cited above. The valuation of the India arm is pegged at $1.5-2 billion, they said.
CDPQ had earlier unsuccessfully pursued an investment in Indus Towers<\/a>, India’s largest mobile tower installation company.
Boston-based ATC has offered to sell a 50% stake in its wholly owned Indian subsidiary, ATC Telecom<\/a> Infrastructure Pvt Ltd (ATC TIPL), implying co-control with a potential equal partner as it has been looking to cut its exposure in the country amid rising business challenges, said the people cited above. ATC has been working with its advisor for the last few months for a deal that had seen interest from infrastructure-focussed funds such as Macquarie and Brookfield<\/a> among others.
CDPQ declined to comment. ATC didn’t respond to queries. KKR couldn’t be reached for comment.
“For a global company with a $93 billion market cap, India does not move the needle that much,” said one of the persons cited. “But its exposure has had an overhang on the stock. So it has been seeking to deconsolidate its global balance sheet by divesting a 50% stake.”
Depending on the final valuation, the value of the 50% stake would be around $750 million to $1 billion. However, there is no guarantee that the discussions with CDPQ will lead to a transaction.
On February 23, in a filing to the US Securities and Exchange Commission<\/a> (SEC), ATC had 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<\/a> (Vi) had said in early 2023 that it won’t resume full repayments of what 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. The US tower company has already taken a $411.6 million (Rs 3,400 crore) impairment charge due to Vi’s partial payments and warned of more such potential charges in future amid continuing payment concerns at its largest customer in India. The company had 76,826 towers in its India portfolio as of end-December 2022.
People privy to the talks said ATC’s proposed stake sale in its Indian arm will not be easy as any potential buyer would want guaranteed business and steady revenue streams from telco customers in India.
“ATC is likely to get a lower valuation for its Indian subsidiary amid reduced demand for towers post-consolidation in the telecom market,” said Mahesh Uppal, director, Com First India, a telecom consultancy. “But there could still be bargain hunters who may find a 50% stake attractive at a reduced valuation, especially since the government appears serious about saving Vi and retaining the industry's three-player market structure.”
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