The Chandigarh bench of the National Company Law Tribunal has approved the merger of Indus Towers with Bharti InfratelNSE 1.34 %, which will create one of the largest telecom tower companies globally.
Bharti AirtelNSE 0.72 % and the UK’s Vodafone will jointly control the pan-India company, which will operate over 163,000 telecom towers across 22 service areas with an estimated valuation of $12-13 billion.
“The NCLT, Chandigarh Bench, vide its order dated May 31, 2019, has sanctioned the scheme of amalgamation and arrangement between Indus Towers (transferor company) and Bharti Infratel (transferee company) and their respective shareholders and creditors under Sections 230 to 232 of the Companies Act, 2013,” Bharti Infratel said in regulatory filings on Sunday.
The tower arm of Bharti Airtel said the Indus-Infratel amalgamation would “become effective” when a certified copy of the NCLT order is filed with the Registrar of Companies “upon fulfillment/waiver of other conditions prescribed in the scheme. The effective date, it said, would be communicated to the exchanges when the scheme takes effect.
Bharti Infratel shares had fallen 0.4% to Rs 271.20 on the BSE on Friday.
Just over a week ago, Bharti Airtel and Vodafone Plc had said Indus Towers CEO Bimal Dayal would head the merged entity, while Hemant Ruia would be its chief financial officer.
The merger, proposed almost a year ago, is expected to conclude by the end of June after obtaining regulatory approvals. In the interim, the existing leadership teams of Indus and Bharti Infratel will manage their respective businesses.
Bharti Airtel and Vodafone Plc currently own 42% each in Indus Towers and are expected to hold 37.2% and 29.4%, respectively, in the merged entity.
KKR and Canada Pension Plan Investment Board will own a combined 6%, stemming from their stake of over 10% in Bharti Infratel. Vodafone Idea, currently holding 11.15% in Indus, is slated to exit at the time of merger.
ET reported earlier that Bharti Airtel and Vodafone Group are in talks with a consortium led by private equity firm KKR to slash their stakes by over half to 13% or less each in the new company. While Airtel is expected to use the funds to pare debt and free up cash to fight Reliance Jio Infocomm, Vodafone may infuse the funds into Vodafone Idea, its Indian mobility joint venture.
Vodafone Plc had said in its 2018 annual report that any additional funding in India would come from the sale of its stake in Indus Towers. The British telco is expected to eventually exit the tower company.
Some analysts said the UK company might wait to get more bang for buck when the outlook for telecom in India improves, pricing power returns and the loss-making Vodafone Idea catches up with Reliance Jio and Airtel on 4G coverage and recovers revenue market share.
ET had also reported that US-based asset management firm Providence Equity Partners is likely to join Vodafone Idea in selling stakes in Indus Towers for roughly Rs 2,000 crore and Rs 5,500 crore, respectively, before its merger with Bharti Infratel.
Source: Economic Times