Bharti Infratel Ltd, the tower arm of India’s largest telecom operator, and Indus Towers on Wednesday agreed to merge their businesses to create the world’s largest tower company outside China.
The combined entity will own more than 163,000 towers, second only to China Tower. The merged company will be listed on the stock exchanges as Bharti Infratel is a publicly traded company.
Bharti Airtel and Vodafone — equal shareholders in Indus — will jointly control the merged company, to be called Indus Towers Ltd, with equal board representation. Idea Cellular, which holds 11.15% in Indus, has the option to get a 7.1% stake in the new company or sell out for 6,500 crores. Idea had earlier said it will exit the tower unit.
Depending on the option selected by Idea, Bharti Airtel will own either 37.2% or 33.8% in the combined entity, and Vodafone will hold 29.4% or 26.7%. Private equity major KKR and Canada Pension Plan Investment Board (CPPIB) will together hold 6%. Providence will retain a minimum 1.1% or opt to retain its full stake in the combined company, which will be 3.1%. The remaining shareholding will be in the hands of the public.
“It is intended that any cash consideration paid to Idea Group and/or Providence will be financed through new debt facilities and the existing cash resources (Rs 6,800 crore) of Bharti Infratel,” the companies said.
According to the terms of the deal, Indus shareholders will get 1,565 shares of Bharti Infratel for each share held, valuing the privately held tower market leader at Rs 71,500 crore ($10.8 billion). Bharti Infratel had a market cap of around Rs 60,279 crore at close of trade on Wednesday.