Allowed

1. Data Infrastructure Trust 2. Bif IV Jarvis India Pte. Ltd. 3. Brookfield Manager Holdings Ltd. 4.BCI Irr India Holdings Limited Partnership 5.BCI Irr India Holdings Inc. 6. Varese Irr Lp 7. Anahera Investment Pte. Ltd. 8.Valkyrie Investment Pte. Ltd.

CCI6 Aug 2024C-2024/03/1125

Case brief

AI extract

What is this about?

The Competition Commission of India granted approval under Section 31(1) for a combination involving Data Infrastructure Trust's acquisition of ATC India. The Commission defined the relevant market for passive infrastructure services, analyzed market shares, and concluded the transaction would not have an appreciable adverse effect on competition.

What did the court decide?

Approval of the proposed combination under Section 31(1) of the Competition Act, 2002.

1. Data Infrastructure Trust 2. Bif IV Jarvis India Pte. Ltd… — Intellectual Property | CCI (2024)

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NON- CONFIDENTIAL

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COMPETITION COMMISSION OF INDIA Combination Registration No.: C-2024/03/1125

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6^th August 2024

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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

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CORAM:

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Ms. Ravneet Kaur Chairperson Mr. Anil Agrawal Member Ms. Sweta Kakkad Member

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Mr. Deepak Anurag Member

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Order under Section 31(1) of the Competition Act, 2002

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On 27^th 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 ).

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1 Formerly known as BIP India Infra Projects Management Services Private Limited

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2 Belonging to the Brookfield Group

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Combination Registration No. C-2024/03/1125

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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.

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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 4^th January 2024 ( SPA ).

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The notifying parties vide communications dated 09^th April 2024, 10^th April 2024³ , 15^th May 2024, and 21^st 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 23^rd April 2024, 25^th April 2024, 30^th April 2024, 31^st May 2024, 6^th June 2024, 10^th June 2024, and 28^th June 2024.

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In terms of Regulation 19(3) of the Combination Regulations read with Section 36(4) of the Act, the Commission vide its direction dated 9^th 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 17^th July 2024 and 1^st August 2024. The Commission vide its order dated 30^th July 2024, under regulation 19(2) of the Combination Regulations, directed the notifying parties to furnish their response to the

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3 read with clarification dated 15th April 2024

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Combination Registration No. C-2024/03/1125

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submissions of one of the TSPs. In response, the notifying parties furnished their submissions dated 4^th August 2024.

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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 interconnected 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.

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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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Combination Registration No. C-2024/03/1125

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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.

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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.

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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.

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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.

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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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Combination Registration No. C-2024/03/1125

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provision of passive telecom infrastructure services in India and exhibit horizontal overlap.

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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 (IP1 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).

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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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Combination Registration No. C-2024/03/1125

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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 predetermined 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.

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With regard to the relevant product market, the Commission observes that while macrosites 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.

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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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Combination Registration No. C-2024/03/1125

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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.

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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.

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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]%.

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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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Combination Registration No. C-2024/03/1125

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telecommunication service providers, removal of a vigorous and effective competitor from the market, and an increase in prices.

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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.

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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.

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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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Combination Registration No. C-2024/03/1125

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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.

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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.

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DIT vide its communication dated 4^th 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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Combination Registration No. C-2024/03/1125

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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.

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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%.

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It has been submitted that *************************************************

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Combination Registration No. C-2024/03/1125

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********************************************************** *********** *************************************************************** ****** ***************************************************************** **** ***************************************************************** **** ***************************************************************** **** ***************************************************************** **** ************************************************************ ********* ********************************************************* ************ ********************************************************* ************ ********************************************************** *********** ******************************************************** ************* *************************************************** The interface, if any,

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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.

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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.

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This order may stand revoked if, at any time, the information provided by the notifying parties is found to be incorrect.

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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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Combination Registration No. C-2024/03/1125

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