American Tower Corp has agreed to buy about 20,000 mobile phone masts for 78.5 billion rupees ($1.2 billion) from Idea Cellular and Vodafone India, who are seeking to merge. As part of the merger deal agreed in March, Vodafone India and Idea are selling the masts they own separately from their Indus Towers joint venture. Idea's share of the sale to American Tower will be 40 billion rupees, while Vodafone India will get 38.5 billion rupees. The two companies have also said they will look at selling their holdings in Indus, the country's biggest mobile masts operator with 123,000 towers, which is jointly owned with an affiliate of rival network operator Bharti Airtel.
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Last month Bharti Infratel said it would consider buying out its partners in Indus Towers, where Vodafone has a 42 percent stake and Idea along with private equity firm Providence owns 16 percent. India's network operators are rushing to consolidate amidst a year-long price war sparked by the entry of new competitor Reliance Jio with a brand new 4G broadband network financed by the country's richest man Mukesh Ambani. Idea Cellular, part of the Aditya Birla conglomerate, on Monday reported its fourth straight quarterly loss, mainly due to it having to compete against Jio's series of cut-price service offers.
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American Tower, which agreed to take control of Indian masts operator Viom in 2015 for 76 billion rupees, has been steadily expanding its presence in India - the world's second biggest wireless market with 1.2 billion mobile subscribers. American Tower said the latest acquisition would be immediately accretive to its adjusted funds from operations per share, with the deal expected to be completed in the first half of 2018, subject to regulatory approvals. Consistent returns in the longer term have also attracted private equity investors to the market, although in the near term mast operators will struggle to grow revenue as some of their tenant phone network operators merge or shut down.
Media reports have said KKR & Co LP, which along with Canada Pension Plan Investment Board, already owns over a 10th of Bharti Infratel, the only publicly-traded mast operator in India, is leading a group of investors to take control of the company. Canada's Brookfield, which called off talks to buy a stake in struggling Indian network operator Reliance Communications masts arm, has said it is open to acquiring the business under revised terms, while it looks at other potential opportunities in the India.
IDEA'S Q2 LOSS
Idea, the third-biggest Indian network operator by revenue and subscribers, said on Monday it suffered a net loss of 11.07 billion rupees in its second quarter ended Sept. 30, which compared with a net profit of 915 million rupees in the same period last year but was less than the 11.25 billion-rupee loss expected on average by analysts. Revenue was down 20.3 percent on a year ago at 75.11 billion rupees, while average monthly revenue per user fell 6.4 percent from the previous quarter to 132 rupees. Shares in Idea closed 3.8 percent lower at 93.35 rupees, while the Mumbai market index was down 0.94 percent. Bank of America Merrill Lynch advised Idea on the American Tower deal, while Morgan Stanley advised Vodafone India.
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