NEW DELHI: Vodafone Group Plc lenders have approved the merger of Indus Towers Ltd and Bharti Infratel Ltd, the UK-based company said in a statement on Monday.
The agreement to continue the deal is conditional on consent to a security package for the merged entity of Vodafone’s existing lenders, the company said.
The consent refers to a loan worth € 1.3 billion used to finance Vodafone’s contribution to the rights issue of its Indian subsidiary Vodafone Idea Ltd in 2019.
Vodafone’s stake in Indus Towers will fall to 28.2% from 42% after the merger. Bharti Infratel, who also has a 42% stake, will own 68.6%. Indus Towers was a three-way joint venture between Bharti Infratel, Vodafone Group and Vodafone Idea.
Vodafone Idea will sell its total 11.15% stake in the merged entity, which will also be called Indus Towers. Provident Equity Partners (PEP), which was an investor in Indus Towers, will receive new shares for a total of 3.2% interest in the merged entity.
The transaction, first announced in April 2018, to create the world’s largest mobile tower company outside of China, is subject to approval by the National Company Law Court (NCLT).
Bharti Airtel, the tower subsidiary of major telecommunications company Bharti Airtel Ltd, had extended the merger deadline with Indus Towers six times citing incomplete details of the approval. Bharti Infratel’s board had approved the merger on September 1.
Proceeds from the divestment of Vodafone Idea’s stake in Indus Towers will help the financially distressed telco to partially pay its adjusted gross income (AGR) related fees.
On September 1, the Supreme Court gave telecom operators 10 years to pay their AGR fees, including interest, penalties and interest on penalties. The fees also include the spectrum usage fee and the license fee charged by the government.
Vodafone Idea has been clarified ₹7,854 in AGR installments but still owes more ₹50,000 crore for the department of telecommunications (DoT). According to experts, the telco needs new capital, higher rates, and concessions on several central levies to continue its operations, in addition to paying the annual installment of AGR fees.
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