American Tower India Bound - Analyst Blog
February 28 2014 - 7:26PM
Zacks
Leading U.S. wireless tower operator American Tower
Corp. (AMT) is likely pursuing the acquisition of Indian
wireless tower operator Viom Networks. Viom currently operates
around 41,000 towers and about 1,000 more are under construction,
supporting more than 95,000 tenancies.
The company is majority controlled by Tata Teleservices together
with Srei group's Quippo Telecom Infrastructure and some private
equity firms. Industry sources predicted that the deal size could
reach up to $1.77 billion, excluding around $1.16 billion of
outstanding debt.
India offers some of the cheapest mobile call tariffs in the
world. Such competitive pricing has significantly affected margins
and network upgrade plans of wireless service providers.
As a result, mobile operators in the country are tending towards
more towers sharing and leasing to save costs. This makes India a
lucrative market for wireless tower operators.American Tower
already owns over 10,000 towers in India.
The wireless tower sector in India is undergoing a wave of
consolidation. Smaller players are considering mergers or complete
sell-out to large global tower operators since these companies lack
the wherewithal to take on their larger rivals.
Last financial year (ended Mar 2013), Viom reached profitability
for the first time. Many industry researchers expect Viom to
increase profit in the current financial year (ending Mar
2014).
Globally, mobile subscriber growth has significantly boosted the
wireless tower industry. Moreover, future financials are likely to
be propelled by strong demand for wireless voice, broadband
wireless data and video networks, which require more tower space.
Deployments of 4G mobile networks necessitate the expansion of
coverage and infrastructure by carriers.
Verizon Communications Inc. (VZ) started
deploying LTE from the end of 2010 and AT&T
Inc. (T) started it from mid-2011. Moreover, the 9-year
Master Lease Agreement signed with Sprint Corp.
(S) will further boost top-line growth of American Tower. American
Tower currently has a Zacks Rank #3 (Hold).
AMER TOWER CORP (AMT): Free Stock Analysis Report
SPRINT CORP (S): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
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