Bharti Infratel-Indus merger: Everything you need to know

Bharti Airtel, Idea Group (along with its subsidiary ABTL, "Idea Group") and Vodafone Group Plc today announced that they have agreed to merge Vodafone's, Idea Group's and Providence Equity Partners' respective shareholdings in Indus Towers Limited ("Indus Towers") into Bharti Infratel Limited, creating a combined company that will own 100 percent of Indus Towers.

The combination of Bharti Infratel and Indus Towers by way of the merger will create a pan-India tower company, with over 163,000 towers, operating across all 22 telecom service areas in India.The combined company will be the largest tower company in the world outside China.

However, the transaction is subject to approvals from the relevant regulatory authorities, including from CCI, SEBI, NCLT, DoT (FDI approval), approval from Bharti Infratel's shareholders, necessary corporate approvals from the companies involved, as well as closing conditions.

The combination of the two highly complementary footprints will create a tower operator with the ability to offer the high quality shared passive infrastructure services needed to support the pan-India expansion of wireless broadband services using 4G/4G+/5G technologies for the benefit of Indian consumers and businesses. And the media statement also read that the move will also help in the delivery of Government of India's vision of 'Digital India'.

Vodafone will be issued with 783.1m new shares in the combined company, in exchange for its 42 percent shareholding in Indus Towers. On the basis that (a) Providence decides to sell 3.35 percent of its 4.85 percent shareholding in Indus Towers for cash, and (b) Idea Group decides to sell its full 11.15 percent shareholding in Indus Towers for cash, these shares would be equivalent to a 29.4 percent shareholding in the combined company. The Transaction values Vodafone's shareholding at Rs 284bn (US$4.3bn).

Providence has the option to elect to receive cash or shares for 3.35 percent of its 4.85 percent shareholding in Indus Towers, with the balance exchanged for shares.

Furthermore, Bharti Airtel and Vodafone will jointly control the combined company, in accordance with the terms of a new shareholders' agreement.

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On the basis that (a) Providence decides to sell 3.35 percent of its 4.85 percent shareholding in Indus Towers for cash, and (b) Idea Group decides to sell its full 11.15 percent shareholding in Indus Towers for cash, Bharti Airtel's shareholding will be diluted from 53.5 percent in Bharti Infratel today to 37.2 percent in the combined company.
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