Bharti Infratel has extended the long stop date for the closure of its merger with Indus Towers for the fifth time, to August 31, saying some conditions still need to be met.
“Since the conditions precedent to be fulfilled for the Scheme to become effective cannot be completed by the extended Long Stop Date i.e. June 24, 2020, the Board of Directors have further extended the Long Stop Date till August 31, 2020, subject to agreement on closing adjustments and other conditions precedent for closing, with each party retaining the right to terminate and withdraw the scheme,” Bharti Infratel said in an exchange filing after market hours on Wednesday.
The merger is dependent on the Supreme Court’s final views in the adjusted gross revenue (AGR) case. If the top court doesn’t allow telcos, including Vodafone Idea, to spread the payment over several years, the Indo-UK telecom JV is likely to shut shop, which will in effect kill the deal. This, since Infratel and Indus both count Vodafone Idea as their major customer, and the telco’s closure will deal a huge blow to both tower companies, severely denting valuations, say market experts.
The Supreme Court on June 18 decided to hold the next hearing in the AGR case till the third week of July, by which telcos and the government have been directed to finalise a roadmap for payment of balance license fee and spectrum usage charge (SUC) dues, which may include an upfront payment clause.
In fact, Bharti Infratel had deferred its June 11 board meeting that was scheduled to take a final call on its big-ticket merger with Indus Towers, which would form among the world’s largest telecom tower companies. The deal, once closed, may net some Rs 4,500 crore to Vodafone Idea if it decides to sell its 7% stake in the merged entity, instead of retaining its holdings.
Telcos have sought 20 years to pay up the AGR dues, but the SC has said they need to make some upfront payments to avail of a deferred payment mechanism.
Shares of Bharti Infratel, India’s only listed tower company, closed 0.37% higher at Rs233.15 on the BSE Wednesday.
Back in February, Bharti Infratel’s mega towers merger deal with Indus had received foreign direct investment (FDI) nod. But two more steps are left before the deal can be closed.
It needs to be cleared by National Company Law Tribunal-Chandigarh and then taken on record by the Registrar of Companies. A person aware of the matter had said Bharti Infratel would approach NCLT Chandigarh after the outcome of the upcoming Bharti Infratel board meeting on the merger is known.
Source: Economic Times