Bharti Infratel Approves Merger With Rival Tower Owner Indus
The deal that includes paying about $543 million for stakes owned by debt-strapped mobile operator Vodafone Idea.
(Bloomberg) -- Bharti Infratel Ltd., the wireless phone tower firm controlled by India’s No. 2 carrier, approved a merger with rival Indus Towers Ltd. in a deal that includes paying about 40 billion rupees ($549 million) for stakes owned by debt-strapped mobile operator Vodafone Idea Ltd.
Shareholders of Bharti Infratel will own 68.6% of the combined entity, while Vodafone Group Plc, the U.K.-based partner of Vodafone Idea, will own 28.2%, the affiliate of Bharti Airtel Ltd. said Tuesday in a statement. The percentages are subject to change based on closing adjustments.
Bharti Infratel agreed to merge with Indus in 2018 and received regulatory approval the following year, only to see the deal languish as a relentless price war among carriers forced some operators to combine or exit, undermining demand for wireless towers. A supreme court ruling last year left Vodafone Idea and Infratel parent Bharti Airtel Ltd. with billions of dollars worth of unpaid dues, further complicating the planned merger as both companies needed to raise capital.
Vodafone Idea held an 11.15% stake in Indus Tower and agreed to pay the merged company 24 billion rupees as a prepayment, the Mumbai-based carrier said Tuesday in a statement. That money would come from cash received from Bharti Infratel at the time of closing, Vodafone Idea said.
Separately on Tuesday, India’s top court approved a 10-year payment plan for telecom companies to clear combined back-fees worth 1.4 trillion rupees, a ruling that may give Vodafone Idea some room to maneuver. The court, which had originally ordered the payments within three months, rejected the 20-year payment timeline supported by carriers.
Shares Drop
Formed by the merger of Vodafone Group’s local unit and billionaire Kumar Mangalam Birla’s Idea Cellular Ltd., Vodafone Idea hasn’t reported an annual profit since announcing their combination in 2017. Birla, its chairman, warned in December that the company may not survive without government help in paying overdue fees and taxes.
Vodafone Idea shares plummeted by 11% as of 3:03 p.m. in Mumbai, after the court ruling. The stock fell as much as 25% right after the announcement. Bharti Infratel dropped 4.9%, the biggest slump since July 16, after sliding as much as 10% earlier. Bharti Airtel gained 6.5%.
The Indian venture’s partner Vodafone will be issued 760 million new shares in the combined tower company in exchange for its 42% shareholding in Indus Towers, the U.K.-based carrier said in a statement. Vodafone’s stake will amount to 28.2%, while Bharti Airtel’s holding will be diluted to 36.7% from 53.5%, Vodafone said.
Brookfield Deal
Separately, Reliance Industries Ltd, owner of India’s No. 1 wireless carrier, completed the $3.4 billion sale of its controlling stake in Reliance Jio Infratel Pvt. to investors including Brookfield Infrastructure Partners L.P.
The investment comprises about 135,000 communication towers that make up Reliance Jio Infocomm Ltd.’s network in India, the investors said in a statement Tuesday.
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