American Tower Closes the Sale of Operations in India to Brookfield

Rhea-AI Summary

American Tower (NYSE: AMT) has closed the sale of its India operations to Data Infrastructure Trust (DIT), sponsored by Brookfield Asset Management. The transaction yielded total cash proceeds of approximately $2.5 billion, including $320 million from monetizing Vodafone Idea debentures and receivables, and $2.2 billion in final closing proceeds. American Tower plans to use these funds to repay existing debts, including the India term loan.

As a result of this sale, ATC India's results will now be reported as discontinued operations. The company has provided updated 2024 outlook estimates, adjusting for the transaction's impact on property revenue, Adjusted EBITDA, and AFFO per share. American Tower has also released proforma estimates for continuing operations, factoring in interest expense savings from the sale proceeds.

Positive

• Received $2.5 billion in total cash proceeds from the sale of India operations
• Plans to use proceeds to repay existing indebtedness, improving financial position
• Updated 2024 outlook estimates provided, showing transparency in financial reporting
• Potential interest expense savings from the use of sale proceeds

Negative

• Loss of revenue stream from India operations
• Reduction in property revenue and Adjusted EBITDA outlook for 2024
• Decrease in AFFO per share outlook for 2024

Insights

Financial Analyst

The sale of American Tower's India operations to Brookfield for $2.5 billion is a significant transaction with immediate financial implications. This deal will substantially reduce AMT's debt, improving its balance sheet. The company plans to use the proceeds to repay existing indebtedness, including the India term loan.

The transaction will impact AMT's financial outlook for 2024. The revised estimates show a decrease in property revenue from $10,830 million to $9,920 million and Adjusted EBITDA from $7,185 million to $6,805 million. However, the AFFO per share is expected to decrease only slightly from $10.48 to $9.95, suggesting that the sale might lead to improved efficiency and profitability in the long run.

Investors should note that while this sale reduces AMT's exposure to the Indian market, it also provides substantial cash to strengthen its financial position and potentially pursue growth opportunities in other markets.

Market Research Analyst

This divestiture marks a strategic shift for American Tower, exiting the Indian market amid challenging conditions. India's telecom sector has faced significant consolidation and financial pressures in recent years, which likely influenced this decision.

For Brookfield, this acquisition aligns with its strategy to expand its digital infrastructure portfolio in high-growth markets. India's digital economy is rapidly growing, presenting long-term opportunities despite short-term challenges.

The transaction's impact on American Tower's outlook suggests that the Indian operations were a significant contributor to revenue but perhaps less so to profitability. The relatively small decrease in AFFO per share (5.06%) compared to the larger drop in revenue (8.4%) indicates that the sale might actually improve AMT's overall operational efficiency.

This move could signal a broader trend of telecom infrastructure consolidation and repositioning by global players in emerging markets.

Legal Expert

The completion of this transaction demonstrates successful navigation of complex regulatory hurdles in India's telecom sector. Foreign investment in this sector is subject to strict scrutiny and the deal's closure indicates regulatory approval was obtained.

The structure of the sale, involving a transfer to an Infrastructure Investment Trust (InvIT), is noteworthy. InvITs are increasingly popular in India for infrastructure assets, offering tax benefits and easier access to capital markets. This structure could provide Brookfield with flexibility in managing and potentially expanding these assets.

The mention of "optionally converted debentures issued by Vodafone Idea" highlights the intricate financial relationships in India's telecom ecosystem. The monetization of these instruments as part of the deal suggests careful legal structuring to address potential liabilities or commitments tied to these assets.

Investors should be aware that while the transaction is complete, there may be ongoing legal obligations or warranties that could affect American Tower in the future.

BOSTON--(BUSINESS WIRE)-- American Tower Corporation (NYSE: AMT) (“American Tower”) today announced that it has closed the previously announced sale of 100% of the equity interests in its operations in India (“ATC India”) to Data Infrastructure Trust (“DIT”), an Infrastructure Investment Trust sponsored by an affiliate of Brookfield Asset Management (NYSE: BAM, TSX: BAM) (“Brookfield”).

Total cash proceeds to American Tower associated with the transaction represents approximately INR 210 billion, or $2.5 billion at today’s exchange rates. Total cash proceeds include approximately $320 million associated with the monetization of optionally converted debentures issued by Vodafone Idea and payments on ATC India receivables, net of withholding tax, and approximately $2.2 billion of final proceeds at closing. Such proceeds are expected to be used to repay American Tower’s existing indebtedness, including the repayment of the existing India term loan at closing. No further proceeds associated with this transaction are anticipated.

American Tower’s current 2024 outlook midpoints, as reported in the Company’s Form 8-K dated July 30, 2024, included full year contributions from the India business. As a result of the transaction, results associated with ATC India will now be reported as discontinued operations. The Company estimates that the current outlook midpoints for property revenue and Adjusted EBITDA, including the contributions from discontinued operations and adjusted to reflect the closing of the transaction, are $10,830 million and $7,185 million, respectively, and AFFO Attributable to AMT Shareholders per diluted Share, which will be reported inclusive of contributions from discontinued operations, is $10.48 per Share. The Company estimates that property revenue and Adjusted EBITDA from continuing operations and AFFO attributable to AMT common stockholders per Share from continuing operations proforma for interest expense savings associated with the use of ATC India sale proceeds, with proceeds and associated interest expense savings impacts considered on an annualized basis, would have been $9,920 million, $6,805 million and $9.95, respectively.

Supplementary slides with additional details have been provided on the “Investor Relations” section of the Company’s website under “Investor Presentations.”

Citi is serving as lead financial advisor and CDX Advisors is serving as financial advisor to American Tower. Talwar Thakore & Associates (TT&A) is serving as principal legal advisor to American Tower.

About American Tower

American Tower, one of the largest global REITs, is a leading independent owner, operator and developer of multitenant communications real estate with a portfolio of nearly 148,000 communications sites (excludes India assets sold) and a highly interconnected footprint of U.S. data center facilities. For more information about American Tower, please visit the “Investor Relations” section of the Company’s website, www.americantower.com.

Cautionary Language Regarding Forward-Looking Statements

This press release contains “forward-looking statements” concerning the Company’s goals, beliefs, expectations, strategies, objectives, plans, future operating results and underlying assumptions and other statements that are not necessarily based on historical facts. Examples of these statements include, but are not limited to, statements regarding the expected use of the proceeds to repay existing indebtedness and the expected impacts of the transaction on the Company’s outlook. Actual results may differ materially from those indicated in the Company’s forward-looking statements as a result of various factors, including those factors set forth under the caption “Risk Factors” in Item 1A of its most recent annual report on Form 10-K, and other risks described in documents the Company subsequently files from time to time with the Securities and Exchange Commission. The Company undertakes no obligation to update the information contained in this press release to reflect subsequently occurring events or circumstances.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240911741652/en/

ATC Contact: Adam Smith

Senior Vice President, Investor Relations and FP&A

Telephone: (617) 375-7500

Source: American Tower Corporation

FAQ

What was the total value of American Tower's sale of its India operations?

American Tower (AMT) received total cash proceeds of approximately $2.5 billion from the sale of its India operations to Data Infrastructure Trust.

How does American Tower plan to use the proceeds from the India operations sale?

American Tower (AMT) plans to use the proceeds from the India operations sale to repay existing indebtedness, including the repayment of the existing India term loan at closing.

How will the sale of India operations affect American Tower's financial reporting?

Following the sale, American Tower (AMT) will report the results associated with ATC India as discontinued operations, and has provided updated 2024 outlook estimates reflecting this change.

What is American Tower's updated 2024 outlook for property revenue after the India sale?

American Tower's (AMT) updated 2024 outlook midpoint for property revenue, including contributions from discontinued operations and adjusted for the India sale, is $10,830 million.