The Department of Telecommunications (DoT) is learnt to have cleared Bharti Infratel’s mega-merger deal with Indus, sources said, paving the way for creating one of the world’s largest telecom tower companies with over 1,63,000 towers, and also offering a much needed avenue for beleaguered Vodafone Idea to raise funds to clear a portion of its massive AGR dues to the government.
The companies are believed to have received the critical foreign direct investment (FDI) nod for the merger deal from DoT on Friday evening, a person with direct knowledge told ET. The deal was stuck for several months as DoT is learnt to have held in abeyance the FDI approval due to a Rs 22,000 crore withholding tax dispute between UK’s Vodafone Group and India.
Loss-making Vodafone Idea has been banking on this tower merger deal closure to raise roughly Rs 4,500 crore from the sale of its stake in the combined entity, which could be used to pay a portion of its AGR dues, estimated at nearly Rs 57,000 crore by the DoT.
Indus Towers is a three-way joint venture between Bharti Infratel, UK-based Vodafone Group Plc and Vodafone Idea, with the first two holding 42% each. Vodafone Idea owns 11.15% while the remaining 4.85% is with private equity firm, Providence. Airtel has a majority stake in Bharti Infratel.
Assuming Vodafone Idea exits, Bharti Airtel and Vodafone Group are expected to hold 37.2% and 29.4%, respectively, in the merged towers entity as per terms of the deal announced in April 2018.
The Bharti Infratel and Indus Towers merger deal was signed on April 23 last year and was to have been concluded by October 24. Subsequently, the companies extended the deal initially by two months to December 24, 2019, and another two months to February 24, in absence of DoT approval.
Source: Economic Times