American Tower, a U.S. wireless infrastructure company, said on Wednesday that its indirectly held, wholly owned Indian subsidiary had entered into a definitive stock purchase agreement that will lead to it acquiring all of the issued and outstanding shares of Essar Telecom Infrastructure, an Indian wireless infrastructure services company.
The total consideration for the acquisition is estimated to be approximately US$430 million and is subject to certain post-closing adjustments, the company said.
Essar Telecom currently owns and operates about 4,450 wireless communications sites in India, including a number of sites that are under construction, American Tower said, while announcing its financial results for the fourth quarter and full year 2009.
American Tower already has about 2,500 towers in India from two acquisitions last year.
The move by American Tower aims to take advantage of a preference by Indian mobile operators to decrease their capital outlays on passive infrastructure like mobile towers, and instead hire it from other companies.
"As passive infrastructure gets commoditized, mobile operators want to free up capital to invest in marketing, new applications and service innovations," Kamlesh Bhatia, a principal research analyst at Gartner, said recently.
A number of large Indian operators including Reliance Communications and Aircel have either spun off their passive infrastructure into separate businesses, or sold them to others.
New entrants into the market have also preferred to use infrastructure rented from dedicated infrastructure service providers or from larger operators. Virgin Mobile for example uses the network of mobile operator Tata Teleservices, while Etisalat's Indian joint venture plans to use the infrastructure of Reliance Infratel, a dedicated infrastructure services company, for its rollout of mobile services.
The completion of the acquisition is subject to certain conditions, including the receipt of regulatory approvals and other customary closing conditions, American Tower said. The acquisition is expected to be close by the end of the second quarter of 2010, it added.