Bharti Infra sets 24 December deadline for merger with Indus Towers; delay to result in lower payment to Vodafone Idea

Bharti Infratel on Friday said it has extended the deadline for the merger of mobile tower company Indus Towers by two months to 24 December while considering regulatory uncertainty looming over the deal. The delay in the deal will also result in a lower payment to Vodafone Idea for its around 11.15 percent stake, according to a regulatory filing by Bharti Infratel to stock exchanges. It was expected that Vodafone Idea will get around Rs 5,500 crore from stake sale in Indus Towers, according to a PTI report. It had earlier said this to the exchanges: “The Board noted that all the requisite government approvals have not been received till date and conditions precedent and processes not completed. It therefore concluded that it is not possible to complete the scheme by the long stop date. Accordingly, the Board authorized a Committee of Directors to explore and evaluate all possible options to secure the best interests of the company and its shareholders under the current facts and circumstances," the company told the exchanges. “The Board of Directors, in its meeting held on October 24, 2019, has accepted the CoD’s recommendations to extend the long-stop date by 60 days i.e. till December 24, 2019, on the basis of agreements on closing adjustments and other conditions precedent for closing,” Bharti Infratel said. The company said based on the net debt as on 30 September 2019 and such agreed closing adjustments, it is expected that the dilution of equity stake held by the current shareholders of Bharti Infratel shall be lower on account of lesser number of shares to be issued against swap of Indus shares vis-a-vis the illustrative shareholdings disclosed in the original transaction announcement. [caption id=“attachment_579422” align=“alignleft” width=“380”]  Reuters[/caption] “These would also result in lower cash payments to Vodafone Idea Limited vis-a-vis the illustrative amounts disclosed earlier. Since the completion of the merger is contingent upon receipt of requisite regulatory approvals and fulfillment of other conditions precedent, there can be no assurance that the merger can be completed within the extended time-frame,” the filing said. On the stock exchange today, Bharti Infratel slips after co announces extension to long stop date w.r.t Indus Tower merger

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Agreement for merger In April 2018, Bharti Airtel, Idea Cellular and Vodafone Group had announced an agreement for the merger of Indus Towers and Bharti Infratel to create the largest mobile tower operator in the world outside China. It will have over 163,000 towers across 22 telecom service areas in India. As per the original deal structure, Vodafone was to be issued 783.1 million new shares in the merged entity in exchange for its 42 percent stake in Indus Towers, and this could take its holding to 29.4 percent in a new company depending on the options finally taken by Idea and Providence. Similarly, Airtel’s stake in the new combined tower behemoth was too diluted to 37.2 percent in the combined entity from 53.5 percent it currently holds in Bharti Infratel. The transaction at the time of deal announcement valued Indus Towers at an enterprise value of Rs 71,500 crore. -- With PTI inputs