Sunil Bharti Mittal-led Bharti Airtel has decided to merge Indus Towers with its tower arm Bharti Infratel, making the combined company to be the worlds largest tower company outside China. In India, the merger will create a pan-India tower company, with over 1,63,000 towers.
“The board evaluated two options — one an offer for sale of significant stake in Bharti Infratel from a consortium of leading PE investors and the other a proposal for merger of Indus Towers into Bharti Infratel. The Board after due deliberations approved the proposal for merger of Indus Towers into Bharti Infratel,” said Bharti Airtel in statement to the exchanges.
The combined company, which will fully own the respective businesses of Bharti Infratel and Indus Towers, will change its name to Indus Towers Limited and will continue to be listed on the Indian Stock Exchanges, said a Bharti Infratel statement.
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The combination of the two companies’ highly complementary footprints will create a tower operator with the ability to offer the high quality shared passive infrastructure services needed to support the pan-India expansion of wireless broadband services using 4G/4G+/5G technologies for the benefit of Indian consumers and businesses. The combined company will continue to offer passive infrastructure services to all telecom operators on a non-discriminatory basis.
“The merger ratio [1,565 shares of Bharti Infratel for every 1 Indus Towers share] is within the range recommended by the independent valuer,” said the statement adding that the transaction values Indus Towers at an enterprise value of ₹71,500 crore [$10.8 billion]. The market valuation of Bharti Infratel is ₹60,241.71 crore as on Wednesday.
As per the terms of the deal, Idea Group has the option to either sell its 11.15% shareholding in Indus Towers for cash, based on a valuation formula (amounting to ₹6,500 crore) or alternatively, receive new shares in the combined company based on the merger ratio.
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With over ₹25,300 crore ($3.8 billion) in revenues for the financial year ended 31 March 2018, the combined company will be well placed to invest on a national basis to satisfy the future demand from all telecom operators in India as they continue to densify their networks to support sustained data traffic growth and roll out new network technologies, the statement added.
Bharti Airtel shares were trading up 2.67% at ₹416.95 while Bharti Infratel shares were trading down 1.23% at ₹325.3 in a flat Mumbai market on Wednesday.