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Brookfield’s Strategic Acquisition of ATC India

Kolkata – In a significant move in the Indian telecom tower market, Canada’s Brookfield has strengthened its position with the recent $2.5-billion acquisition of American Tower Corp’s (ATC) India unit. This strategic acquisition is expected to intensify the competition with Indus Towers and bring forth a wave of innovation and aggressive rental deals to attract top telco clients.

A Game-Changer in India’s Telecom Tower Industry

Brookfield’s 78,000-odd towers in India are strategically positioned to offer comprehensive 4G and 5G coverage across the nation. These towers are primarily connected by fiber backhaul, providing Brookfield with a unique advantage to leverage the rollout of 5G and emerging technologies in heavily populated urban areas and remote rural regions. Meanwhile, Indus Towers currently operates India’s largest telecom tower network.

Boosting Competition and Innovation in Telecom Infrastructure

Rohan Dhamija, Head (India & Middle East) at management consulting firm Analysys Mason, noted, “The ATC India buyout will give Brookfield a larger tower footprint and more ammunition to compete with Indus. This is likely to result in both tower companies offering a combination of new products, such as in-building solutions (IBS), and attractive rental deals and discounts during negotiations for long-term tower contracts with major telco clients in the future.”

Reliance Jio’s 5G Ambitions Get a Significant Boost

Furthermore, Brookfield’s acquisition is expected to support Reliance Jio’s 5G rollout and expansion substantially. The Mukesh Ambani-led telco is already an anchor tenant of Brookfield’s towers in India, strengthening its position in the rapidly evolving Indian telecom landscape.

This acquisition marks the exit of Boston-ATC from the Indian market and has triggered significant consolidation in the tower sector. India’s telecom tower industry now features two major players, Brookfield and Indus Towers, following Brookfield’s successful all-cash bid, set to conclude in the second half of 2024.

Brokerage CLSA estimates that Brookfield will control 235,000 towers post-ATC, beating Indus Towers’ 204,212. Together, these two giants will own 80% of the sector’s tower assets in India, with the remaining assets primarily under the purview of state-run BSNL.

The acquisition strengthens Brookfield’s position and sets the stage for a more competitive landscape in India’s telecom tower industry. This development is expected to benefit telco clients and tower companies, bringing about a new era of competition, innovation, and balance in the market.

Brookfield’s Strong Partnership with Jio Boosts 5G Ambitions

In a strategic partnership that dates back to August 2020, Brookfield acquired Jio’s towers for a staggering Rs 36,800 crore and its fiber assets for approximately Rs 91,370 crore. This existing collaboration positions Brookfield as pivotal in supporting Jio’s ambitious 5G rollout plans. Jio, already an anchor tenant with a 30-year non-cancellable ‘take or pay’ master service agreement (MSA) valid until August 2050, further solidifies the synergy between the two giants.

Capitalizing on 4G and 5G Expansion

Brookfield’s towers are strategically positioned for comprehensive 4G and 5G coverage across India. These towers are primarily connected by fiber backhaul, offering a unique platform to capitalize on the rollout of 5G and emerging technologies in densely populated urban areas and remote rural regions. Indus Towers, on the other hand, currently operates India’s largest telecom tower network.

While Brookfield’s acquisition strengthens its position, it poses challenges for the current market leader, Indus Towers. Indus has struggled to recover a backlog of old dues, amounting to nearly Rs 10,000 crore, from cash-strapped telco client Vi (Vodafone Idea).

Vi’s Financial Woes Impact Indus Towers

Vi’s inability to clear its dues to Indus Towers significantly affects the tower infrastructure provider’s long-term financial stability. Vi accounts for over 40% of Indus Towers’ revenues, making the telco’s financial health critical to the tower company’s sustainability.

Bharti Airtel chairman Sunil Mittal recently expressed concerns about Indus Towers’ inability to recover past dues from Vi. Minority shareholders have complained about the Indus board’s approach to recovering these dues.

BofA Securities anticipates an uptick in 5G loading, potentially creating demand for 600,000 tenancies between FY24-33. As the industry shifts its focus post-4G completion, the primary emphasis will be on 5G deployments and continued rollout. The majority of the new demand is expected to be driven by 5G densification in the coming years.

A Glimpse into the Future of 5G Deployment

With Jio having concluded its pan-India 5G rollout and Airtel on course to launch next-gen mobile broadband services nationally by March, the tower sector is gearing up for a transformative phase. BofA Securities highlights that once 5G loading is complete, the industry will likely shift its focus to airwaves in the 26GHz band, particularly in dense urban areas.

Source: Telecom Economic Times

Is American Tower Corp Stock Halal?

Based on the criteria of Islamic finance, which are business activity, interest-bearing securities, and interest-bearing debt, it appears that American Tower Corp (ATC) stock does not meet the requirements for being considered halal.

It is a NOT HALAL Stock.

Therefore, Musaffa does not recommend investors trade this stock at this moment, as it may involve activities not compliant with Islamic finance principles.

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