Sunil Mittal-driven mobile infrastructure company Bharti InfratelWednesday said that it would merge its operations with Indus Towers that has Vodafone India and Idea Cellular as stakeholders to create a $14.6 billion company which will be one of the largest mobile tower entities worldwide with 1.63 lakh towers.
“The combination of Bharti Infratel and Indus Towers by way of merger will create a pan-India tower company, with over 163,000 towers, operating across all 22 telecom service areas in India. The combined company will be the largest tower company in the world outside China” the company said in a statement.
ET had reported the deal details in its April 25 edition.
Indus Towers is currently jointly owned by Bharti Infratel (42%), Vodafone (42%), Aditya Birla’s Idea group (11.15%) and Providence (4.85%).
“The merger Ratio of 1,565 shares of Bharti Infratel for every 1 Indus Towers share is within the range recommended by the independent valuer. Based on the SEBI pricing guidelines for Bharti Infratel, in relation to the proposed scheme, as at 23 April 2018 (INR363 per share), the merger ratio implies an enterprise value for Indus Towers of INR71,500 crore (US$10.8 billion). This is equivalent to valuing Indus Towers at 9.3x EV/LTM EBITDA,” the companies said.
The Bharti Infratel stock was down 0.9% at Rs 326.35 on the BSE in early trade.
The combined entity, which will fully own the respective businesses of Bharti Infratel and Indus Towers, according to the statement, will change its name to Indus Towers Ltd. and will continue to be listed on the Indian Stock Exchanges.
Bharti Airtel and Vodafone, according to the companies, will jointly control the combined company, in accordance with the terms of a new shareholders’ agreement. The transaction, however, is subject to regulatory and other approvals, including from CCI, SEBI, NCLT, DoT (FDI approval), and is expected to close before the end of the financial year ending 31 March 2019.
As a part of combination modalities, Vodafone will be issued with 783.1 million new shares in the combined company, in exchange for its 42% shareholding in Indus Towers.
The merger conditions also gives Idea the option to either sell its 11.15% shareholding in Indus Towers for Rs6,500 crore 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 or receive new shares in the combined company based on the merger ratio.
If Idea decides to sell, it will use the proceeds for the benefit of the entity resulting from the merger of Vodafone India and Idea Group.
Providence has the option to elect to receive cash or shares for 3.35% of its 4.85% shareholding in Indus Towers, with the balance exchanged for shares.
If Idea declines to sell out and Providence decides to part sell, the new entity will be 37.2% owned by Bharti Airtel, 29.4% by Vodafone Group, 1.1% by Providence with the rest belonging to public shareholders. If Idea and Providence decide to stay in the company, they will get a 7.1% and 3.1% holding, respectively.The stakes of others will be diluted proportionately to Bharti Airtel, 33.8%, Vodafone 26.7% and the public, 29.3%.
The merger between the two tower companies has come at a time when revenues of incumbents — particularly Bharti Airtel, Vodafone India and idea Cellular- face a cash squeeze on the back of Mukesh Ambani-owned Reliance Jio’s disruptive entry in September 2016.
Source: Economic Times