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COMPETITION COMMISSION OF INDIA
Combination Registration No.: C-2024/03/1125
6th August 2024
Notice under Section 6(2) of the Competition Act, 2002 jointly given by Data
Infrastructure Trust, BIF IV Jarvis India Pte. Ltd., Brookfield Manager Holdings Ltd.,
BCI IRR India Holdings Limited Partnership, BCI IRR India Holdings Inc., Varese IRR
LP, Anahera Investment Pte. Ltd., Valkyrie Investment Pte. Ltd., and Project Holdings
Nine (DIFC) Limited
CORAM:
Ms. Ravneet Kaur
Chairperson
Mr. Anil Agrawal
Member
Ms. Sweta Kakkad
Member
Mr. Deepak Anurag
Member
Order under Section 31(1) of the Competition Act, 2002
1.
On 27th March 2024, the Competition Commission of India (Commission) received a
notice (Notice), under sub-section (2) of Section 6 of the Competition Act, 2002 (Act),
jointly given by Data Infrastructure Trust (DIT), acting through its investment manager
Data Link Investment Manager Private Limited1 (Investment Manager); BIF IV Jarvis
India Pte. Ltd.2 (Jarvis/Brookfield Sponsor); Brookfield Manager Holdings Ltd.
(Brookfield Shareholder); BCI IRR India Holdings Inc. (BCI India Inc); BCI IRR
India Holdings Limited Partnership (BCI India LP); Anahera Investment Pte. Ltd.
(Anahera); Varese IRR LP (Varese); and Valkyrie Investment Pte. Ltd. (Valkyrie).
1 Formerly known as BIP India Infra Projects Management Services Private Limited
2 Belonging to the Brookfield Group
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Initially, Project Holdings Nine (DIFC) Limited (BN Co-Sponsor), being one of the
acquirers in one of the interconnected transactions, was not a notifying party to the
Notice. However, in response to the communication issued under regulation 14 of the
Competition Commission of India (Procedure in regard to the Transaction of Business
Relating to Combinations) Regulations, 2011 (Combination Regulations), it also
became a notifying party.
2.
The Notice was given pursuant to the execution of inter alia Share Purchase Agreement
amongst DIT, ATC Asia Pacific Pte. Ltd., ATC Telecom Infrastructure Private Limited
(ATC India), and American Tower International, Inc. (ATC US) on 4th January 2024
(SPA).
3.
The notifying parties vide communications dated 09th April 2024, 10th April 20243, 15th
May 2024, and 21st June 2024 issued under regulation 14 of the Combination
Regulations were required to remove defects from the Notice and furnish certain
information relevant for the purpose of assessment of the proposed combination. The
notifying parties furnished their responses vide submissions dated 23rd April 2024, 25th
April 2024, 30th April 2024, 31st May 2024, 6th June 2024, 10th June 2024, and 28th June
2024.
4.
In terms of Regulation 19(3) of the Combination Regulations read with Section 36(4)
of the Act, the Commission vide its direction dated 9th July 2024 required certain
telecom service providers (TSPs) to furnish their comments, relevant to the competition
issue related to passive telecom infrastructure services in India, on the transaction
involving the proposed acquisition of 100% of the share capital of ATC India by DIT.
The Commission received responses between 17th July 2024 and 1st August 2024. The
Commission vide its order dated 30th July 2024, under regulation 19(2) of the
Combination Regulations, directed the notifying parties to furnish their response to the
3 read with clarification dated 15th April 2024
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submissions of one of the TSPs. In response, the notifying parties furnished their
submissions dated 4th August 2024.
5.
The proposed combination envisages the acquisition of 100% of the share capital of
ATC India by DIT (Proposed ATC Acquisition). It is also envisaged that DIT will
issue units to entity(ies) belonging to Brookfield Group viz., BN Co-Sponsor; BCI
Group viz., BCI India Inc, BCI India LP; and GIC Group viz., Anahera (Proposed DIT
Unit Allotment). Further, BIF IV Jarvis IM Holdco Pte. Ltd (IM Holdco), holding
company of the Investment Manager, will issue shares to its existing shareholders viz.,
Brookfield Shareholder (belonging to the Brookfield Group), Valkyrie (belonging to the
GIC Group), and Varese (belonging to the BCI Group) (Proposed IM Holdco Share
Issue). The Proposed ATC Acquisition, Proposed DIT Unit Allotment, and Proposed
IM Holdco Share Issue are collectively referred to as the Proposed Combination. The
Proposed DIT Unit Allotment and the Proposed IM Holdco Share Issue are inter-
connected to the Proposed ATC Acquisition. The post-Proposed DIT Unit Allotment
unitholding percentage of Brookfield Group, GIC Group and BCI Group in DIT would
be at minor variations to their pre-Proposed DIT Unit Allotment unitholding in DIT.
Further, there will be no change to the shareholding percentage (and effective interest)
of the shareholders of IM Holdco pursuant to the Proposed Share Issue.
6.
DIT is an infrastructure investment trust registered with the Securities and Exchange
Board of India (SEBI) under the Securities and Exchange Board of India (Infrastructure
Investment Trusts) Regulations, 2014. It has wholly owned subsidiaries viz. Summit
Digitel Infrastructure Limited (Summit), Crest Digitel Private Limited (Crest), Roam
Digitel Infrastructure Private Limited (Roam) and Crest Virtual Network Private
Limited (Crest VNPL). Both, Summit and Crest are engaged in the provision of passive
telecom infrastructure services in India. However, Roam and Crest VPNL are not
engaged in any activity.
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7.
ATC India is an indirect subsidiary of ATC US. It is engaged in the provision of passive
telecom infrastructure services in India. ATC India currently has two wholly-owned
subsidiaries. However, at the time of closing, ATC India will not hold any shares of, or
interests in any of these subsidiaries.
8.
Brookfield Corporation is the ultimate holding entity of the Brookfield Group. It
controls a global alternative investment management company, which owns and
operates assets focused on infrastructure, renewable power, property and other real
estate assets.
9.
British Columbia Investment Management Corporation (BCI) is a Canadian
institutional investor. BCI’s portfolio includes investments in: (i) healthcare, (ii)
education services, (iii) automotive components, (iv) technology, (v) logistics, (vi)
infrastructure services, etc. at a worldwide level.
10.
Anahera is a foreign portfolio investor registered with the SEBI. Valkyrie is a Foreign
Venture Capital Investors (FVCI) registered with the SEBI under the SEBI (Foreign
Venture Capital Investors) Regulations, 2000. Hereinafter, Anahera and Valkyrie are
collectively referred to as GIC Investors. The GIC Investors are part of the GIC Group.
11.
It has been submitted that for a TSP to provide connectivity to its end consumers, it
requires passive infrastructure and active infrastructure. Passive telecom infrastructure
could be defined as the infrastructure required by telecom service provider to install
active infrastructure for the provision of telecommunications services. Passive telecom
infrastructure mainly consists of towers and dark fibre networks along with the power
setup. It refers to equipment such as towers, shelters, power regulation equipment,
battery banks, diesel generator sets, air conditioners, and fire extinguishers required at
a site where such towers are installed. Both DIT and ATC India are active in the
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provision of passive telecom infrastructure services in India and exhibit horizontal
overlap.
12.
The notifying parties have submitted that the relevant product market may be defined
as the market for provision of passive infrastructure services through telecom towers in
India (Passive Telecom Infrastructure Market), and the same need not be segmented
further. This is largely based on the submissions that from a demand-side perspective,
the products that form part of the Passive Telecom Infrastructure Market provide the
TSPs with the same functionality, i.e., the ability to install antennae and active
equipment to increase coverage. Further, from a supply-side perspective, there is also
substitutability between various passive telecom infrastructure products. Key players in
the Passive Telecom Infrastructure Market are active in erecting all kinds of towers.
There are no regulatory requirements that prohibit passive telecom infrastructure
providers that are active in setting up one type of tower from setting up another type of
tower. All companies that have the Infrastructure Providers Category-I Registration (IP-
1 Registration) can expand into other types of towers. Therefore, the supplier of one
type of tower (for example macro towers) can easily provide other types of towers (like
small cell sites).
13.
With regard to the relevant geographic market, it has been submitted that the Passive
Telecom Infrastructure Market should be considered on a national basis, i.e., India-wide,
since the competitive conditions for the supply of passive telecom infrastructure services
are uniform across India. This is largely based on the submissions that all major passive
telecom infrastructure providers typically operate across the majority of telecom circles;
key customers of passive telecom infrastructure providers i.e., TSPs typically have a
presence across India and enter into Master Service Agreements (MSAs) with multiple
passive telecom infrastructure providers at the national level; IP-1 Registration issued
by the Department of Telecommunication, Government of India, pursuant to which
Indian companies are permitted to provide passive telecom infrastructure services,
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permits passive telecom infrastructure providers to operate in the whole of India; and
each MSA contains a single uniform standard rates (pricing) which reflects average
costs across India and that may increase during the lifetime of the contract at a pre-
determined rate subject to certain premium amounts applicable in cases of difficult
terrain or premium locations (with higher rental costs). Further, there are no local
specification requirements or regulatory restrictions limiting the coverage area which
could be serviced by TSPs using a single tower.
14.
With regard to the relevant product market, the Commission observes that while macro-
sites are deployed to achieve homogeneous coverage, small cells sites address capacity
needs within a limited area. Further, due to the limited coverage range of a small cell, it
may not be economically viable to plan extensive coverage only using small cell sites,
because a very high number of small cell sites would be needed to achieve the coverage
objective and may result into higher costs. Further, micro-sites may not be suitable to
host antenna equipment usually deployed on macro-sites, because of load-bearing
requirements/size requirements and higher output power (electromagnetic emissions).
Furthermore, some of the passive telecom infrastructure services providers are
providing only micro towers/sites. Therefore, the provision of passive telecom
infrastructure services through telecom towers should be further delineated into separate
markets for macro towers/sites and micro towers/sites. With regard to the relevant
geographic market, the Commission finds merit in the arguments of the notifying parties
more particularly in relation to macro towers/sites.
15.
The notifying parties have also submitted that given that the TSPs have the ability to
provide passive telecom infrastructure services in the market and do in fact provide such
services to third parties, the market share computation should also include captive use
of the facilities by the TSPs. In this regard, the Commission observes that the pertinent
question for consideration is whether a particular supply/use of facility contributes to
the competition in the market or not, and accordingly exerts competition constraints on
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the supplier of similar services or not. The use of its own facilities by the TSPs are not
market-facing, thus, the same does not exert competition constraints on the supplier of
the passive telecom infrastructure service providers. Therefore, own use of the facility
by the TSPs should not be included in the computation of market share. However, if any
passive telecom infrastructure facility of one TSP is used by any other TSP, it should be
made part of the computation of market share. Therefore, while computing the market
share based on tenancies, number of tenancies of one TSP with another TSP have been
included.
16.
With regard to the horizontal overlap between DIT and ATC India in relation to micro
towers/sites, the Commission observes that during the last four years, the number of
tenancies attributable to ATC India has reduced against the multifold increase in the size
of market, resulting into a considerable decline in its market share. Further, there have
been four new entries during CY 2021. The new entrants such as CloudExtel and Suyog
have gained a sizable market share within a period of last 2-3 years, indicating healthy
competition constraints exerted by these new entrants. Therefore, the Proposed
Combination is not likely to raise competition concerns regarding micro towers/sites.
17.
With regard to the horizontal overlap between DIT and ATC India in relation to macro
passive telecom Infrastructure towers/sites, the Commission observes that as per the
market share estimates provided by the parties, the combined market shares of DIT and
ATC India in terms of the number of towers/sites, tenancies, and vacancies are in the
range of [35-40]% or [40-45]%. Further, the market share of Indus Towers in terms of
the number of towers/sites, tenancies, and vacancies is in the range [30-35]%, [45-50]%,
and [25-30]%.
18.
From the responses of TSPs, it is observed that only one TSP (TSP A) has raised
concerns. It largely submits that the Proposed Combination may lead to an increase in
concentration in the market, an increase in the degree of control of TSPs over passive
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telecommunication service providers, removal of a vigorous and effective competitor
from the market, and an increase in prices.
19.
The notifying parties have submitted that the Reliance group does not have any
ownership interest in or control over DIT, or any management role in any entity owned
by DIT other than providing third-party services to Summit. Such entities (and any other
entities belonging to the RIL Group) do not and will not perform any function for other
DIT Downstream Affiliates including ATC India, following the completion of the
Proposed Combination. Summit is free to build new towers for TSPs without any
requirement to offer tenancies on such towers to Reliance Jio. There is no veto right of
Reliance Jio on offering new tenancies by Summit to TSPs on existing towers acquired
from Reliance Jio. Further, the changes in shareholding of Indus Towers are unrelated
to the Proposed Combination.
20.
The notifying parties have submitted that apart from market shares and market
concentration, the Act considers a number of factors (such as countervailing buying
power and the presence of a strong and viable competitor) that must be considered in
order to conclude that a transaction results in an adverse effect on competition. Due to
the trend towards consolidation in the mobile telephony service segment and the
consequent decrease in the number of TSPs, and the fact that TSPs typically enter into
MSAs with multiple passive telecom infrastructure providers, providing them with
easily available and comparable options for allocating their passive telecom
infrastructure demand TSPs exert high countervailing buyer power on passive telecom
infrastructure providers. Further, Indus will continue to remain the market leader in
terms of tenancies.
21.
It has been further submitted by the notifying parties that there are large number of
vacant tenancies across towers in India and sharing of existing infrastructure results in
an increase in returns to the service providers as well as a reduction in costs to TSPs.
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The commercial reality is that the passive telecommunications infrastructure service
providers are highly incentivised to add tenants to existing towers, and conversely have
no incentive to not provide towers and high quality of services to any of the TSPs on
whom they are entirely dependent. Since the passive telecommunications infrastructure
service market in India is witnessing a supply surplus whereas the demand is limited to
a select few large TSPs which exercise a high degree of countervailing buyer power,
coupled with the highly negotiated long-term MSAs that the TSPs require from such
service providers, makes it unfeasible for passive telecommunications infrastructure
service providers to provide lower quality services to any of its customers.
22.
It has also been submitted by the notifying parties that ATC India has publicly declared
its intention to exit India and that ATC was exploring various strategic alternatives to
reduce its exposure to India. Therefore, any assertion that the Proposed Combination
will eliminate a strong and vigorous competitor from the market is inaccurate. The
Proposed Combination will in fact enable DIT to invest in and expand the tower
portfolio of ATC India which will benefit all TSPs in fulfilling their demand for passive
telecom infrastructure. Further, the commercial arrangements between TSPs and passive
telecommunications infrastructure service providers are subject to contractual
obligations under the MSAs. As such, TSPs have a recourse under the MSAs in relation
to any non-performance issues. Further, a possibility of adverse revision in the overall
pricing for the TSP A is not likely as a contractual matter given the indefinite agreements
between the TSP A and each of Summit and ATC India with pre-agreed pricing.
23.
DIT vide its communication dated 4th August 2024 has undertaken that it will, and will
procure that its portfolio entities/special purpose vehicles (including Summit and Crest,
and following completion of the Proposed Combination, ATC India) will, provide
passive infrastructure services to their respective customers and potential customers,
including TSPs such as Reliance Jio Infocomm Limited, Vodafone Idea Limited, Bharat
Sanchar Nigam Limited and Bharti Airtel Limited, in a non-discriminatory manner.
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24.
It is observed that ATC India has anchor and co-location tenancies with all the major
mobile network operators (MNOs). Whereas the anchor tenancies of DIT are largely
with a particular TSP, the other TSPs largely have co-locations tenancies with it that too
are in small numbers. This suggests that the increase in concentration qua TSP A
because of the Proposed Combination is not considerable enough. Considering the
submissions of the notifying parties, the undertaking of DIT, and the facts of the case in
toto, the Commission observes that the horizontal overlaps between DIT and ATC India
regarding macro tower/sites is not likely to raise any competition concerns.
25.
ATC India is also engaged in the activities of laying of dark fibres. However, the market
share of ATC India in the Optical fibre cable business is less than 1%.
26.
It has been submitted that *************************************************
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between the activities of ATC India and ABC is not likely to raise any competition
concerns as the market share of ABC is not significant enough. Therefore, the
Commission leaves the issue of whether the above-discussed activities exhibit an
overlap or not open.
27.
Considering the material on record, including the details provided in the notice and the
assessment of the Proposed Combination based on the factors stated in Section 20(4) of
the Act, the Commission is of the opinion that the Proposed Combination is not likely
to have appreciable adverse effect on competition in India. Therefore, the Commission
approves the Proposed Combination under Section 31(1) of the Act.
28.
This order may stand revoked if, at any time, the information provided by the notifying
parties is found to be incorrect.
29.
The information provided by the notifying parties except the information not redacted
in the non-confidential version of this order shall be treated as confidential in terms of
and subject to provisions of Section 57 of the Act.
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30.
The Secretary is directed to communicate to the notifying parties.
(Deepak Anurag)
Member
(Sweta Kakkad)
Member
(Anil Agrawal)
Member
(Ravneet Kaur)
Chairperson
