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Business

Bharti Infratel-Indus Towers merger: Voda-Idea to sell 11.15% stake for Rs 4,000 cr

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Bharti Infratel in its meeting on August 31 decided to proceed with the scheme of arrangement between Indus Towers and Bharti Infratel Limited. As per theagreement, Vodafone Idea will sell 11.15 per cent stake in Indus for Rs 4,000 crore, the company said. New entity, Bharti Infratel and Indus Towers together, will become largest tower company in the world outside China, with a pan-India tower reach comprising 163,000 towers across 22 telecom service areas.

“After deliberations, the board has decided to authorise the chairman to proceed with the scheme and to comply with other procedural requirements for completion of the merger including approaching NCLT to make the scheme effective subject to certain procedural condition precedents,” Bharti Infratel in a statement to the stock exchanges said.

As per the Bharti Infratel, the shareholding structure in the merged company could be:

Vodafone 28.2%
PEP 3.2%
Total Indus share swap 31.4%
Infratel Shareholders 68.6%
The company said the aforesaid percentages are subject to change, based on agreed closing adjustments. “The above is basis cash consideration chosen by Vodafone Idea Limited (VIL) for its 11.15 per cent shareholding in Indus, which will be based on 60 days VWAP (volume weighted average price) as at closing date (and agreed closing adjustments). Based on today’s calculation, the cash consideration comes to Rs 4,000 crore,” the company added.

Indus Towers is a joint venture between Bharti Infratel, UK-based Vodafone Group Plc and Vodafone Idea. Bharti Infratel and Indus Towers have overlapping operations in four circles – Haryana, Uttar Pradesh and Rajasthan.

To secure the payment obligation of VIL under the MSAs, Vodafone Idea and Vodafone Group have entered into certain security arrangements with the company for the benefit of the merged company, the announcement said. “This includes a combination of a security deposit by Vodafone Idea, security via a pledge of a certain number of shares of the merged company out of those issued to Vodafone Plc and a corporate guarantee by Vodafone Plc, which can get triggered in certain situations and events,” the company said.

The security arrangement will provide the merged company a payment cover of over one year for the operational payments due from Vodafone Idea. The scheme will become effective on the date on which certified copy of the order of National Company Law Tribunal is filed with registrar of companies.

Bharti Infratel had said in a presentation that the new entity would have a turnover of more than Rs 25,000 crore, controlling more than a third of the tower industry in the country. It also stated that it might save close to Rs 560 crore annually. This latest development can help Bharti Airtel and Vodafone Idea that collectively owe over Rs 80,000 crore in adjusted gross revenue dues to the government.

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