Bharti Infratel To Proceed With Indus Tower Merger Plan
Bharti Infratel Ltd.’s board has decided to proceed with a proposal to merge with Indus Towers to create the biggest tower company outside China more than two years after the deal was announced, paving the way for India’s struggling telecom operators’ to unlock value.
The decision is based on cash consideration chosen by Vodafone Idea Ltd. for its 11.15% shareholding in Indus Tower, according to an exchange filing. Vodafone Idea will get Rs 4000 crore for its 11.15% holding.
To secure the payment obligation of Vodafone Idea under the scheme, Vodafone Idea and Vodafone Group Plc. have entered into certain security arrangements with the tower unit of Bharti Airtel Ltd. for the benefit of the merged entity, the filing said.
- A combination of a security deposit by Vodafone Idea
- Security via pledge of a certain number of shares of the merged company out of those issued to Vodafone Plc. (as part of the scheme)
- A corporate guarantee by Vodafone Plc. that can get triggered in certain situations and events
“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 the NCLT (National Company Law Tribunal) to make the scheme effective subject to certain procedural condition precedents,” Bharti Infratel said in the filing.
The telecom infrastructure firm had extended the deadline for merger till Aug. 31—the fifth time since the deal was signed in April 2018. The initial deadline was in October 2019. That was extended to December and then till February 2020. Despite receiving the final approval from the Department of Telecommunications on Feb. 21, the tower company controlled by Sunil Mittal-led Bharti Airtel extended the deal till April 24, then again until June 24 and then Aug. 31.
Repeated delay in unlocking value was a cause of worry for Bharti Airtel, Vodafone Idea and Vodafone Group Plc as they were looking to raise funds by divesting stake in the merged entity. The operators, locked in a tariff war, have to pay thousands of crores in pending dues after the Supreme Court ruled that wireless carriers will have to include non-core revenue to calculate levies
Indus Towers was jointly owned by Bharti Infratel (42%), Vodafone Plc. (42%), Vodafone Idea (11.15%) and Providence (4.85%).