Indian Economy News

Bharti Infratel, Indus Towers announce merger to create telecom tower behemoth

New Delhi: Bharti Airtel’s tower arm Bharti Infratel Ltd and Indus Towers Wednesday announced a merger which will create a pan-India tower company with a combined revenue of Rs25,360 crore, with over 163,000 towers, operating across all 22 telecom service areas in India. 

The combined entity will be called Indus Towers Ltd and will continue to be listed on the Indian stock exchanges.

Mint had in February reported that the two companies were considering a merger.

Vodafone India Ltd and publicly traded Bharti Infratel Ltd hold 42% each in Indus Towers. Idea Cellular Ltd owns 11.15% and US-based private equity fund Providence owns 4.85%.

Idea has the option to either sell its 11.15% shareholding in Indus Towers for Rs6,500 crore or receive new shares in the combined company based on the merger ratio, a Bharti Infratel statement said, adding all proceeds from the sale of the 11.15% stake will be for the benefit of the entity resulting from the merger of Vodafone India and Idea Cellular.

Providence has the option to choose cash or shares for 3.35% of its 4.85% shareholding in Indus Towers, with the balance exchanged for shares.

Vodafone will be issued 783.1 million new shares in the combined company, in exchange for its 42% shareholding in Indus Towers. 

However, the final number of shares issued to Vodafone and the cash paid or shares issued to Idea Group and Providence, will be subject to closing adjustments, including but not limited to movements in net debt and working capital for Bharti Infratel and Indus Towers.

The transaction is conditional on regulatory and other approvals, including from Competition Commission of India (CCI), Securities and Exchange Board of India, National Company Law Tribunal, Department of Telecom, and is expected to close before the end of the financial year ending 31 March 2019.

Moreover, on the basis that Providence decides to sell 3.35% out of its 4.85% shareholding in Indus Towers for cash, and Idea decides to sell its full 11.15% shareholding in Indus Towers for cash, Bharti Airtel’s shareholding will be diluted from 53.5% in Bharti Infratel to 37.2% in the combined entity.

Bharti Airtel and Vodafone will have equal rights in the combined company. Following completion, the board of the combined company will comprise of 11 directors, of whom three each will be appointed by Bharti Airtel and Vodafone, one will be appointed by KKR/Canada Pension Plan Investment Board and four (including the chairman) will be independent. The management team will be confirmed prior to closing of the merger process.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.