Indian telecom tower companies Bharti Infratel and Indus Towers will miss the October 24 deadline to complete their merger due to a delay in government permission, according to a regulatory filing.
Bharti Infratel said it has set up a panel to assess the impact of the delay in the merger and recommend action in the interest of the firm and its shareholders, PTI reported.
“The merger of Bharti Infratel and Indus Towers contemplated the closing by October 24, 2019, by which time a large number of processes and conditions precedent were required to be completed. The board noted that all the requisite government approvals have not been received and conditions precedent and processes not completed,” the filing said.
In April 2018, Bharti Airtel, Idea Cellular and Vodafone Group had announced an agreement for the merger of Indus Towers and Bharti Infratel to create the largest mobile tower operator in the world outside China.
It will have over 163,000 telecom towers across 22 telecom circles in India. The company is waiting to get clearance from the Department of Telecom.
The board authorised a committee of directors to explore and evaluate all possible options to secure the best interests of the company and its shareholders under the current facts and circumstances. The committee will forward its recommendations to the board on or before October 24, 2019.
The combined company aims to own 100 percent of Indus Towers, which at present is jointly owned by Bharti Infratel (42 percent holding), Vodafone (42 percent), Idea Group (11.15 percent) and Providence (4.85 percent).
The deal gives Idea Group an option to sell its 11.5 percent stake in Indus Towers for cash or in lieu of receiving new shares. Providence too has the option to receive cash or shares for 3.35 percent of its 4.85 percent share in Indus Towers with balance exchanged for shares.
As per the deal structure, Vodafone will be issued 783.1 million new shares in the merged entity in exchange for its 42 percent stake in Indus Towers and this could take its holding to 29.4 percent in the new company.
Similarly, Airtel’s stake in the combined tower company may be diluted to 37.2 percent from 53.5 percent it currently holds in Bharti Infratel. The transaction values Indus Towers at an enterprise value of Rs 71,500 crore.
Bharti Infratel announced that its chief financial officer, S Balasubramanian, resigned to pursue a career outside the mobile tower firm. The company has appointed Singtel Group Finance vice president Tan Yong Choo as an alternate director on its board.