Bharti Infratel-Indus Towers Merger May Miss December 24 Deadline

The merger of Bharti Infratel and Indus Towers is likely to hit a roadblock as the government may not give the green signal to the proposed merger by the December 24 deadline, which may push the three major signatories — Bharti Airtel, Vodafone Group Plc and Vodafone Idea — to cancel the deal and look out for other options to monetise their stakes.

Many industry watchers say the amalgamation will help Bharti Airtel and Vodafone Group, promoters of Indus Towers, to offload their stake, reduce debt and invest in their telecom operations in India, which has been facing stiff competition from new entrant Reliance Jio since 2016. In April 2018, the companies had agreed to merge their businesses to create the world’s largest tower company outside China.

“The proposal is stuck in the DoR (Department of Revenue).

A government official mentioned that the withholding tax case against Vodafone Group is causing the delay. The financial daily quoted the official as saying, “There are concerns over the withholding tax raised by India on Vodafone Group, which is yet to be resolved.”

It is worth mentioning here that Vodafone and the Centre are fighting a legal battle over a Rs 22,000-crore tax dispute related to the UK-based telco’s $11-billion deal to acquire the majority stake of Hutchinson Whampoa’s back in 2007.

At present, Indus Towers is jointly owned by Bharti Infratel (42 percent), Vodafone (42 percent), Vodafone Idea group (11.15 percent) and private equity firm Providence (4.85 percent).

Bharti Infratel’s debt widened since the merger announced in April 2018. Also, the company’s net debt with lease liabilities was Rs 5,249 crore at September-end compared with Rs 4,995 crore at June-end.

Vodafone Idea needs to immediately raise funds to pay more than Rs 53,000 crore in adjusted gross revenue (AGR)- related dues to the government. Several news reports mentioned that the debt-laden telco held discussion with companies to sell its optic fibre business and its data centre.

Bharti Airtel, which has to shell out over Rs 35,500 crore in AGR dues, has already announced plans to initially raise $ 3 billion via debt and equity. The Gurugram-based telco would raise $2 billion via qualified institutional placement and $1 billion via bonds and debentures.―Times Now