BHARATI Infratel & Indus Towers Merged For Improving Mobile Services In India

FUNCTING in competitive market, Bharti Infratel and Indus Towers have   agreed to merge for creating a USD 14.6 billion firm with world’s second-largest number of mobile users .Since towers are prerequisite for improving mobile telephony and related services it is estimated that the merged entity will have at its disposal more than 163,000 towers across the country. Indus Towers currently operates in 15 telecom service areas or circles while Bharti Infratel’s operations are focused on the remaining 7 circles. “The combination of Bharti Infratel and Indus Towers  with their highly complementary footprints, will create a pan-India tower company with the ability to offer high-quality passive infrastructure services to all operators on a non-discriminatory basis, needed to support the pan-India expansion of wireless broadband services using 4G/4G+/5G technologies,” a  statement said.

Bharti Airtel and Vodafone will jointly control the combined firm, the two companies said in a statement . The transaction is subject to regulatory and other approvals, including from Competition Commission of India (CCI), Securities and Exchange Board of India (SEBI), National Company Law Tribunal (NCLT), Department of Telecom (FDI approval), and is expected to close before the end of the fiscal year concluding on March 31,2018.”Indus Towers will be merged with Bharti Infratel through a scheme of arrangement, Bharti said in the statement. The merged entity will be called Indus Towers Ltd and will continue to remain listed. Bharti Airtel, which currently owns 53.5 percent in Bharti Infratel, will get 33.8 percent to 37.2 percent stake in the combined entity, the statement said.The  shareholding is dependent on what Aditya Birla Group’s Idea and Providence do with their minority shareholding in Indus Tower. As per agreement, Vodafone India will get between 26.7 percent and 29.4 percent of the Indus-Bharti Infratel combine. Vodafone has 42 percent stake in Indus Tower. Bharti Infratel too has an equivalent stake while the remaining is with Aditya Birla’s Idea (11.15 percent) and Providence (4.85 percent).”The combined company will fully own the respective businesses of Bharti Infratel and Indus Towers,” the statement said. The merger will help unlock value for the companies which are locked in a tariff war unleashed by newcomer Mukesh Ambani led Reliance Jio Infocomm Ltd. that has hurt earnings and triggered consolidation in the sector. Vodafone and Idea Cellular are already in the final stages to merge their mobile operations.
Bharti Airtel separately said it plans to engage with potential investors to evaluate a stake sale in the combined tower company, which will have an equity value of Rs 96,500 crore (USD 14.5 billion). Under the deal announced today, Idea has the option to sell its 11.15 percent stake in Indus for cash at the merger ratio that values the stake at Rs 6,500 crore (USD 1 billion). Under the deal, Bharti Infratel agreed to pay 1,565 of its own shares for each Indus Tower share.

Vodafone India will receive 783.1 million shares in the combined company, valuing the UK-based firm’s stake at Rs 28,400 crore (USD 4.3 billion). If Idea decides to sell all of its stake and Providence sells 3.35 percent of its 4.85 percent shareholding, the new entity will be 37.2 percent owned by Bharti Airtel and 29.4 percent by Vodafone Group, while 1.1 percent will be with Providence and the rest by public shareholders.
In the event Aditya Birla led  Idea and Providence decide to continue to stay invested, Bharti Airtel would have a shareholding of 33.8 percent in the combined entity. Vodafone in such a scenario would have 26.7 percent while Idea Group would get 7.1 percent and Providence would have 3.1 percent holding. The remaining 29.3 percent would be with public. “Bharti Airtel and Vodafone will have equal rights in the combined company,” the statement said. It has also been agreed that the the Board of the combined company will comprise 11 directors. Of them will be appointed by each of Bharti Airtel and Vodafone, one will be appointed by KKR/Canada Pension Plan Investment Board and four (including the Chairman) will be independent,” it added.

None of Bharti Airtel, Vodafone or Idea Group (if it elects to receive shares), will be subject to a lock-in on their shareholdings in the combined company. “It is intended that any cash consideration paid to Idea Group and/or Providence will be financed through new debt facilities and the existing cash resources of Bharti Infratel. On the basis that Idea Group and Providence elect to receive the maximum possible cash consideration, the pro forma net debt of the combined company would have been Rs 5,600 crore (USD 0.8 billion) as at March 31, 2018,” it said. Bharti Infratel and Indus Towers together had over 163,000 towers and 367,000 tenancies as at March 31, 2018, the statement added. With over Rs 25,360 crore in revenues in 2017-18, the combined company will be well placed to invest on a national basis to satisfy the future demand from all telecom operators in India as they continue to expand their networks to support sustained data traffic growth and roll out new network technologies, it said.

 

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