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Bharti Airtel, Vodafone May Raise Over $5 Billion Through Stake Sale In Tower Venture

Bharti Airtel and Vodafone- may raise over $5 billion by selling part stake in the tower company to be created through the merger of Bharti Infratel and Indus Towers.

According to a report in the Economic Times, Bharti Airtel and Vodafone Group Plc are in talks with a consortium led by private equity firm KKR to slash their stakes by over half in the company that will be created by the imminent merger of Bharti Infratel and Indus Towers. This stake sale could lead to a change in management at the merged entity.

“The combined entity is being valued at $12-13 billion and once Bharti Infratel and Indus Towers merge, Bharti Airtel and Vodafone Group are aiming to bring their stakes down to around 13% each,” a person with knowledge of the development told the business daily.

It may be noted that the merger of Bharti Infratel and Indus Tower has been in the making for about a year and it is expected to complete soon. Merger of the two entities will come up for approval at the National Company Law Tribunal (NCLT) on May 14. “The stake sales in the new entity should conclude by June, when the merger is likely to close,” another person having knowledge of the matter told ET.

After the merger, Bharti Airtel and Vodafone Group, which currently hold 42% stake in Indus Tower, will own 37.2% and 29.4% respectively in the merged entity. KKR and Canada Pension Plan Investment Board (CPPIB) will own a combined 6%, arising from their stake of over 10% in Bharti Infratel. Vodafone Idea, currently holding over 11% in Indus, is expected to exit at the time of the merger, the ET report said.

“Post merger, Bharti Airtel and Vodafone Group would reduce their stakes, by selling them primarily to KKR and a small part to Canada Pension and some others,” the second person quoted above told the publication.

KKR could eventually hold between 25-32% stake in the merged entity, while Canada pension fund and others may own a minority stake in the company.

The above-mentioned sources told ET Bharti Airtel and Vodafone Group are expected to retain a minimum of 13% at the beginning, allowing them certain rights such as veto powers over signing and terminating contracts with clients, among others. However, the Vodafone Group is expected to eventually exit the tower company.

If the merged entity is valued at $13 billion, Bharti Airtel could raise about $3.2 billion (Rs22,400 crore) by reducing its stake from over 37% to 13%. On its part, the Vodafone Group could raise around $2.1 billion by reducing its holding to 13% from over 29%, the business daily mentioned.―Times Now

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