Telecom infrastructure company Indus Towers is set to merge with Bharti Infratel, to form the world’s largest tower company, outside China. The merger was announced by Bharti Airtel today. The combined entity will change its name to Indus Towers Ltd and will continue to be listed on the Indian Stock Exchanges.

The merged entity will have over 163,000 towers and 367,000 tenancies across 22 telecom service areas in India. Indus Towers currently operates in 15 circles while Bharti Infratel is focused on the remaining 7 circles. In a statement, the companies said, “The combination of Bharti Infratel and Indus Towers, with their highly complementary footprints, will create a pan-India tower company with the ability to offer high-quality passive infrastructure services to all operators on a non-discriminatory basis, needed to support the pan-India expansion of wireless broadband services using 4G/4G+/5G technologies.”

They said the combined company’s equity value would be Rs 965 billion (US$14.6bn). In the deal, the enterprise value of Indus Towers is at Rs 715 billion (US$10.8bn).

For the year ended March 31, 2018, combined revenue of the companies was Rs 253,604 million (US$3,830m). Individually, revenue for Bharti Infratel was Rs 66,180 million (US$999m) and that of Indus Towers was Rs 187,424 million (US$2,830m).

The merger ratio for the deal is 1,565 shares of Bharti Infratel for every one Indus Towers share.

Ownership

Indus Towers is jointly owned by Bharti Infratel (42%), Vodafone (42%), Idea Group (11.15%) and Providence (4.85%). Bharti Infratel is owned by Bharti Airtel with 53.5% shareholding.

In the merged entity, Idea Group has the option to either sell its 11.15% shareholding in Indus Towers for nearly Rs 65 billion (US$1.0bn) or get new shares in the combined company based on the merger ratio.

Vodafone, which is another stakeholder in Indus Towers, will be issued with 783.1 million new shares in the combined company, in exchange for its 42% shareholding in Indus Towers. The transaction values Vodafone’s shareholding at Rs 284 billion (US$4.3bn).

Providence can choose to either receive cash or new shares in exchange for 3.35% stake. Remainder from the total 4.85% shareholding, will be exchanged for shares. Bharti Airtel’s shareholding will be diluted from 53.5% in Bharti Infratel today to 37.2% in the combined company.

Bharti Airtel and Vodafone will jointly control the combined company.

Management

Bharti Airtel and Vodafone will have equal rights in the combined company. Following completion, the Board of the combined company will have 11 directors, three appointed by each of Bharti Airtel and Vodafone, one will be appointed by KKR/Canada Pension Plan Investment Board and four (including the Chairman) will be independent. The management team will be confirmed prior to closing, the companies said.

The transaction is conditional on regulatory and other approvals, including from CCI, SEBI, NCLT, DoT (FDI approval), and is expected to close before the end of the financial year ending March 31, 2019.