Bharti Infratel Shares End 17% Higher After Completing Merger With Indus Towers
Power lines hang from a transmission tower. (Photographer Carla Gottgens/Bloomberg)

Bharti Infratel Shares End 17% Higher After Completing Merger With Indus Towers

Shares of Bharti Infratel Ltd. rose after the telecom infrastructure provider said its proposed merger with Indus Towers to create the biggest tower company outside China has been completed.

The scheme of amalgamation was approved by the Chandigarh bench of the National Company Law Tribunal on Oct. 22. “Subsequent to filing of the NCLT orders by the respective companies with the Registrar of Companies on Nov. 19, 2020, the scheme has become effective on even date and the merger of Indus and Infratel has been completed,” the tower unit of Bharti Airtel Ltd. said in an exchange filing.

According to the scheme of arrangement, the company’s name will now be changed to Indus Towers Ltd. from Bharti Infratel Ltd.

Vodafone Idea Ltd. had elected to receive cash after this transaction. The company has received a sum of Rs 3,760 crore for its entire shareholding in Indus Towers, the filing said. The board of Bharti Infratel has also allotted 75.78 crore equity shares of Rs 10 each to the Vodafone Group and 8.75 crore shares of Rs 10 each to P5 Asia Holding Investments (Mauritius) Ltd. (Providence), amounting to 28.1% and 3.25% stake, respectively, in the post-issue share capital of the company.

Indus Towers was jointly owned by Bharti Infratel (42%), Vodafone Plc. (42%), Vodafone Idea (11.15%) and Providence (4.85%).

Bimal Dayal, erstwhile managing director and chief executive officer of Indus Towers, has been appointed as the CEO of the merged entity, the filing said.

The completion of the merger is crucial as the telecom operators were looking to raise funds by divesting stake in the merged entity. The carriers, 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.

Bharti Infratel in September said the board had decided to proceed with the merger. That was more than two years after the deal was signed in April 2018. The initial deadline for the merger 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 extended the deal till April 24, then again until June 24 and then Aug. 31.

Shares of Bharti Infratel ended with gains of 17.8% - the biggest single-day gain since March this year at Rs 219.05. The stock has risen in six of the last seven trading sessions.

Shares of Vodafone Idea ended 8.65% to Rs 10.05 apiece. The carrier’s stock, too, has advanced in six of the last seven trading sessions.

Of the 26 analysts tracking Bharti Infratel, 13 have a ‘buy’ rating, eight suggest a ‘hold’ and the rest recommend a ‘sell’. The stock crossed its 12-month consensus price target of Rs 215.09 during Friday's trading session.

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