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Bharti Infratel To Meet On Feb. 24 To Decide How To Merge With Indus Towers

Bharti Infratel Ltd. said that its board would meet on Monday to decide how it would merge with peer Indus Towers Ltd., following the Telecom Department’s approval for the deal.

The tower arm of Bharti Airtel Ltd. also informed the exchanges today that it has secured approval for foreign investment necessitated by the merger—which was announced nearly 20 months ago. Regulatory bodies like the Competition Commission of India, Securities and Exchange Board of India and the National Company Law Tribunal had previously approved the merger that would create the world’s largest tower company outside China.

Bharti Infratel and Indus Towers have overlapping operations in four circles—Haryana, Uttar Pradesh (West), Uttar Pradesh (East) and Rajasthan. Their merger would create a pan-India company with over 165,742 towers operating across all 22 telecom service areas and have a tenancy ratio—or the number of operators who put up their antennae on the towers—of nearly 1.86 times.

The company had said in a presentation that the new entity would have a turnover of more than Rs 25,000 crore, control more than a third of the tower industry in India and save close to Rs 560 crore annually. The new entity would be called Indus Towers Ltd. and will continue to be listed on Indian exchanges.

Merger Implications

The development can help Bharti Airtel and Vodafone Idea Ltd.—that collectively owe over Rs 88,000 crore in adjusted gross revenue dues to the government—raise funds by divesting their stakes in the merged entity to pare debt and fund their network expansion.

The dues arose after the Supreme Court ruled in October last year that operators will have to include non-core revenue to calculate levies, ending a 14-year-old legal battle between them and the government on definition of AGR. That also dealt a crippling blow to the bruised industry that stares at dues and penalties worth over Rs 92,000 crore.

Debts have ballooned for Vodafone Idea and Bharti Airtel, who were adversely affected by the entry of Mukesh Ambani’s Reliance Jio Infocomm Ltd., which initially offered free data followed by rock-bottom tariffs. That forced incumbents to either merge with each other or exit the market.―Bloomberg Quint

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