Bharti Infratel on Thursday once again extended the deadline for completion of the company’s merger with Indus Towers, this time as the two parties were unable to close the transaction amid the covid-19 lockdown.
“The board of directors took note of the status of Scheme of arrangement between Indus and Bharti Infratel and have further extended the Long Stop Date till June 24, 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 a filing with exchanges.
An official with the Bharti Group company, requesting anonymity, said that the two parties have been unable to close the agreement due to disruption from the lockdown.
The postponement of the long stop date on Thursday marks the fourth deadline extension for the merger, which was initially expected to complete in March last year.
The previous extension of long-stop date was supposed to end on Friday. In February, the Bharti Group-company had extended the deadline for completing the merger by two months.
Bharti Infratel on Thursday also reported its earnings for the January-March quarter. The company posted a 1% year-on-year growth in its consolidated revenue for the quarter to ₹3,624 crore, while its profit grew 7% to ₹650 crore.
The growth in profit was despite weaker operational performance and on account of a fall in tax expenses.
While the covid-19 pandemic and resulting nationwide lockdown has disrupted the company’s merger plans, it is unlikely to affect the company’s business, Bharti Infratel said.
“The passive infrastructure, as well as active telecom operations of the Group’s customers, are covered under essential services which are actively engaged in fulfilling the surge in demand arising out of the choice exercised by almost all industries to conduct their operations remotely… The Group believes that thus far, there is no significant impact of COVID-19 pandemic on the financial position and performance of the Group,” Bharti Infratel said in its filing.
The tower operator added that it does not expect any significant changes in estimates as of now as the company is running its business and operations as usual without any major disruptions.
Completion of the merger will not just help the merged entity, also called Indus Towers, to become the world’s second largest tower operator, but also help their shareholders—Bharti Airtel and Vodafone Idea, who have been worst hit by a tariff war and an unfavourable court verdict related to adjusted gross revenue (AGR).
The Supreme Court had last month made it clear that there could not be another attempt at calculating the AGR dues of telecom firms.
Bharti Airtel and Vodafone Idea, the companies worst hit by the apex court ruling on adjusted gross revenue, are customers of the two tower companies as well as shareholders in Bharti Infratel and Indus Towers respectively.
Bharti Infratel, along with Vodafone Idea’s co-parent Vodafone Group plc, also own 42% stake each in Indus Towers. Vodafone Idea itself owns 11.15% stake in the country’s largest tower company.
The estimate by the Department of Telecommunications (DoT) has estimated Vodafone Idea’s dues at ₹58,254 crore, including penalty and interest. Out of this, the company has so far paid ₹6,854 crore.
Bharti Airtel Ltd has so far paid the DoT ₹18,004 crore, while its total dues are estimated by the DoT at ₹43,980 crore. The estimated amount includes Telenor India’s dues as well, which Bharti Airtel had acquired in 2018.
In a relief to the operators, the DoT last month proposed to the apex court that telecom operators be allowed to stagger their payments to the government and pay a reduced annual interest rate of 8%. The total dues of the telecom firms stood at ₹1.69 trillion as of October, the telecom department had said in an affidavit to the court.