Vodafone Idea said it will take necessary action to allot ATC a total of 1.44 billion fully paid-up equity shares

Indian telecom operator Vodafone Idea said that tower company American Tower Corporation (ATC) has requested conversion of debentures worth INR4.4 billion ($173.5 million)equity shares, according to a Reuters report.

Vodafone Idea, a joint venture between U.K. carrier Vodafone and India’s Aditya Birla Group, said it will take necessary action to allot American Tower a total of 1.44 billion fully paid-up equity shares by converting its 14,400 optionally convertible debentures (OCD).

The report noted that debentures worth INR16 billion had been issued to American Tower in January 2023.

“ATC is one of the largest infrastructure service providers for Vodafone Idea and both entities have a long-term relationship,” Vodafone Idea said in a statement.

In a previous earnings call with investors, Vodafone Idea’s CEO Akshaya Moondra had said the telco is looking to roll out 5G services in six to seven months after closing its pending fundraise. The telco has said the funds would be used to expand 4G capacity and launch 5G technology. Rival carriers Bharti Airtel and Reliance Jio Infocomm already cover most of India with their 5G networks.

In January, American Tower signed a definitive agreement with Data Infrastructure Trust (DIT), an infrastructure investment trust associated with an affiliate of Brookfield Asset Management, for DIT to acquire 100% of the equity interests in American Tower’s operations in India.

The transaction, which reflects the completion of the previously announced strategic review of American Tower’s operations in India, is subject to customary closing conditions, including government and regulatory approvals.

The U.S. company also said that the transaction is expected to close in the second half of 2024.

According to American Tower, total cash proceeds include an enterprise value on the ATC India operations of approximately $2 billion. “Proceeds associated with the enterprise value assume the repayment of existing intercompany debt and the repayment, or assumption, of the existing India term loan, by DIT. Furthermore, and considered within the total potential cash proceeds above, American Tower will retain the full economic benefit associated with the optionally converted debentures (OCDs) issued by Vodafone Idea and will be entitled to receive future payments related to existing ATC India receivables,” American Tower said.

ATC India has a portfolio of around 78,000 sites across India.

This will be Brookfield’s third acquisition in the Indian telecommunications space. In 2022, Brookfield acquired a portfolio of 5,000 indoor business solution sites and small cell sites, which advances the rollout of 5G and enables telecom operators to extend their coverage capacity in difficult-to-access and dense areas. Brookfield also has a portfolio of roughly 175,000 towers that were acquired in 2020 from Reliance Industrial Investments and Holdings Limited.