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Bharti Infratel decides to proceed with Indus Towers merger; Vodafone Idea’s cash consideration at Rs 4,000 crore

Telecom infrastructure company Bharti Infratel has decided to proceed with its imminent, but long delayed, merger with Indus Towers, the company said in a regulatory filing on Tuesday. Infratel will be a majority shareholder in the merged entity with an expected stake of 68.6%, and UK-based Vodafone Group will hold 28.2%. Vodafone Idea, meanwhile, will cash out its 11.15% shareholding in Indus Towers for an estimated Rs 4,000 crore, Bharti Infratel said.

To secure this payment obligation, Vodafone Idea and Vodafone Group have entered into certain security arrangements, which includes a combination of a security deposit by Vodafone Idea, security via pledge of a certain number of shares of the merged company out of those issued to Vodafone Group, and a corporate guarantee by Vodafone Group, which can get triggered in certain situations and events. The security arrangements between the two are subject to regulatory approvals, and will provide the merged company with a payment cover of over a year for the operational payments due from Vodafone Idea.

Proposed shareholding following the merger | Source: Bharti Infratel

The deal to merge Bharti Infratel and Indus Towers was signed in April 2018, and when complete, the merged entity will become the world’s largest tower company, outside China. It received approval from the Competition Commission of India in July 2018. However, the deal’s completion has reportedly been delayed five times, due to a delay in other approvals; an approval from the Department of Telecommunications, for instance, was only issued in February 2020.

Vodafone Idea gets AGR relief: The Supreme Court on Monday allowed telecom operators to pay their Adjusted Gross Revenue dues over the next ten years, giving Vodafone Idea some relief. The telco owes around Rs 58,000 crore towards AGR dues.

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