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Bharti Infratel and Indus Towers merge to create India’s largest tower company

April 25, 2018
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Bharti Airtel has approved the merger of Indus Towers with Bharti Infratel in a deal that will create the largest tower company in India, and in the world, outside of China.

Operationally, the combined entity will control more than one-third of the tower industry in India. With over 163,000 towers, it will have a market share of close to 35 per cent. The tenancy ratio for the merged entity will be close to 2.25x, ahead of the industry average of nearly 2x.

Economies of scale resulting from the merger will help in bringing down the combined entity’s capital expenditure.

Indus Towers is currently jointly owned by Bharti Infratel (42 per cent), Vodafone (42 per cent), Aditya Birla’s Idea group (11.15 per cent) and Providence (4.85 per cent).

Deal details:

The merger ratio for the deal will be 1,565 shares of Bharti Infratel for every one Indus Towers share.

Bharti Airtel and Vodafone will jointly control the combined company, in accordance with the terms of a new shareholders’ agreement.

Vodafone will be issued with 783.1 million new shares in the combined company, in exchange for its 42 per cent shareholding in Indus Towers.

Providence has the option to elect to receive cash or shares for 3.35 per cent of its 4.85 per cent shareholding in Indus Towers, with the balance exchanged for shares.

The merger condition gives Idea has the option to (ii) sell its 11.15 per cent shareholding in Indus Towers for cash based on a valuation formula linked to the VWAP for Bharti Infratel’s shares during the 60 trading days prior to completion of the merger, which, if calculated at the time of this announcement, would equate to a cash consideration of Rs 65 billion, or alternatively, (ii) receive new shares in the combined company based on the merger ratio. All the proceeds from the sale of the 11.15 per cent stake will be for the benefit of the entity resulting from the merger of Vodafone India and Idea Group.

The combined entity, which will fully own the respective businesses of Bharti Infratel and Indus Towers will change its name to Indus Towers and will continue to be listed on the Indian Stock Exchanges.

The transaction, however, is subject to regulatory and other approvals, including from the Competition Commission of India, Securities and Exchange Board of India, National Company Law Tribunal, the Department of Telecommunications (FDI approval).

Pro forma for the transaction, the combined company’s equity value would be Rs 965 billion.

The transaction is expected to close before the end of the financial year 2018-19.



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