The proposed merger between Bharti Infratel Ltd and Indus Towers Ltd cannot be completed by 24 October as the company is still awaiting a key government approval, Bharti Infratel chairman Akhil Gupta said, adding that a new committee will meet on Thursday to evaluate “all possible options” for future strategy.
“We had announced the merger in April 2018. The long stop period was for 18 months, that is till 24 October. This required many closing conditions to be met, including government approvals. We have received all approvals except the one pertaining to FDI (foreign direct investment) enhancement from department of telecommunications,” Gupta said in a post-earnings call on Tuesday.
“The delay in getting this approval is because of the procedure involved,” he added.
Gupta’s statement comes a day after Bharti Infratel informed the stock exchanges that its board had noted that all the requisite government approvals had not been received till date, and conditions precedent and processes were not completed.
“Accordingly, the board authorized a committee of directors to explore and evaluate all possible options to secure the best interests of the company and its shareholders under the current facts and circumstances,” the company told the exchanges on Monday.
The board’s decision is expected on 24 October.
In April 2018, the two tower companies had agreed to merge their businesses to create the world’s largest tower company, barring state-owned China Tower.
The proposed combined entity will own more than 163,000 towers. Its nearest rival in India will be ATC with 78,000 towers.
Once the merger is completed, the two companies have envisaged that Airtel will hold between 33.8% and 37.2% in the combined entity.
Vodafone Group Plc will own between 26.7% and 29.4%. Airtel and Vodafone will have equal rights in the merged entity.
Vodafone Idea’s 11.15% stake in Indus Towers had an implied value of ₹5,630 crore as of June-end, which it plans to monetize on completion, the telecom firm had said on 29 July.
Airtel and Vodafone Idea need to raise cash ahead of the planned auction of airwaves in January for the launch of 5G services. The operators are already saddled with a mountain of debt, largely due to spectrum-related dues to the government.
Source: Mint