Bharti Infratel Settles Tower Exit Charges With Bharti Airtel, Vodafone Idea

Bharti Infratel Ltd. settled tower exit charges claim with two telecom operators even as analysts expected future business to come from fresh tenancies rather than extension or renewal of existing contracts.

The company settled claims with Bharti Airtel Ltd. and Vodafone Idea Ltd. for Rs 2,000 crore, India’s second-largest tower operator said in an analyst call after announcing the third-quarter results. Bharti Infratel will receive Rs 1,100 crore in cash. For the remaining Rs 900 crore, Bharti Airtel and Vodafone Idea have committed to provide business worth Rs 1,800 crore to Bharti Infratel over the next five years, it said.

Sanjesh Jain of ICICI Securities, however, said the settlement seems to be in favour of the telecom operators.

The company reported 55,000 tenancy cancellations as of November, ever since Mukesh Ambani waded into the sector with his telecom arm Reliance Jio Infocomm Ltd., spurring consolidation.

Half of the 55,000 tenancy exits was due to the merger of Vodafone India Ltd. and Idea Cellular Ltd. in August. Vodafone Idea had earlier in an exchange filing said it cancelled 66,000 tenancies with all tower operators for which it received an exit charge demand of Rs 3,000 crore.

Bharti Infratel would have raised a demand of close to Rs 1,248 crore from Vodafone Idea alone for the tenancy exits, according to BloombergQuint’s calculation. It, however, settled the entire 55,000 tenancy cancellations for Rs 1,100 crore in cash and the interest and future business worth Rs 1,800 crore over five years.

The company received Rs 55 crore as exit charges in the quarter ended December and it will get Rs 90 crore each for the next 12 quarters. The total payout also includes 7 percent interest rate, it said.