Vodafone, Idea selling their tower business to ATC for Rs7,850 cr

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Vodafone India Ltd and Idea Cellular Ltd today said that they have agreed to sell their standalone tower businesses to ATC Telecom Infrastructure Pvt Ltd for about $1.2 billion (Rs7,850 crore). Vodafone and Idea are slated to merge soon.

The standalone tower businesses of Vodafone India and Idea are pan-India passive telecommunication infrastructure businesses, comprising a combined portfolio of approximately 20,000 towers with a combined tenancy ratio of 1.65x as of 30 June 2017, the companies said in a joint statement.

”Both Vodafone India and Idea as customers, and ATC TIPL as a mobile network infrastructure provider, have agreed to treat each other as long-term preferred partners, subject to existing arrangements. The parties will work together to further the expansion of high speed mobile networks in India,” the companies said.

”The sale of the company’s standalone business will be achieved through the sale of the entire shareholding of ICISL (Idea Cellular Infrastructure Services Ltd) by the company comprising 60,000 equity shares of Rs10 each to the purchaser,” Idea Cellular said in an exchange filing.

“In the event that the completion of the sale of the standalone tower businesses precedes the completion of the proposed merger of Vodafone India and Idea, Vodafone India will receive Rs3,850 crore ($592 million) and Idea will receive Rs4,000 crore ($615 million),” the statement added.

The standalone tower businesses of Vodafone and Idea comprise a combined portfolio of nearly 20,000 towers.

The deal is expected to be completed by the first half of 2018. The tower deal will not affect the merger terms of the two companies.

“The receipt of these proceeds prior to completion was anticipated and provided for in the merger agreement and hence would not affect the agreed terms of the Vodafone India and Idea merger, including the amount of debt which Vodafone will contribute to the combined company at completion,” it added.

The sale of tower business is subject to regulatory and other approvals.

Earlier this year, Vodafone India and Idea had agreed to merge their operations to create the country’s largest telecom operator worth of more than $23 billion with a 35-per cent market share.

Vodafone India managing director Sunil Sood had earlier said the merger of the two companies was on track for completion in 2018.

The combined entity of Vodafone India and Idea Cellular, which are currently India’s number 2 and 3 telecoms operators respectively, would dislodge Bharti Airtel as the leader in the world’s second-largest telecom market.

The combination will have almost 400 million customers with 35 per cent customer and 41 per cent revenue market share. It will have revenue of Rs81,600 crore and an operating profit of Rs24,400 crore. Together, Idea Cellular and Vodafone India have a debt of Rs1.08 trillion. The merger is expected to be completed in 2018.

”After Vodafone India and Idea have completed their merger, 6,300 co-located tenancies of the two operators on the combined standalone tower businesses will collapse into single tenancies over a period of two years without the payment of exit penalties,” the companies said.

In addition to the standalone tower business, Idea also owns a 16-per cent stake in Indus Tower Ltd, which is a three-way joint venture between Idea Cellular (through its unit Aditya Birla Telecom Ltd), Bharti Infratel Ltd and Vodafone India.

Idea is also reported in talks to sell its entire stake in Indus to another buyer with the consent of Bharti Airtel.

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