Merger of Bharti Infratel and Indus Tower receives DoT approval: sources


New Delhi: The Ministry of Telecommunications on Friday approved the long-standing merger of Bharti Infratel and Indus Towers to help both telecommunications companies, particularly Vodafone Idea, sell their stake in the company to collect donations. Official sources said the merger approval was granted without conditions.

The deal stalled as DoT no longer had FDI approval due to a withholding tax dispute between the British Vodafone Group and India of 22,000 rupees.

This approval was key to the merger of the two tower companies and, in turn, vital to Vodafone Idea to sell its stake and raise funds.

The combination of Bharti Infratel and Indus Towers creates a tower company with over 163,000 towers that are active in all 22 telecommunications services. The combined company will be the largest tower company in the world after China.

Vodafone Idea faces the most important survival problem in raising donations for paying EGR fees to the government. DoT has requested Rs 53,000 crore as outstanding EGR fees from him and has so far paid Rs 3,500 crore, and for the rest it is evaluating the amount.

Airtel, who has EGR fees of 35,500 rupees, paid 10,000 rupees, but is in a relatively comfortable position.

The loss-making Vodafone Idea was looking forward to completing this tower merger to raise around 4,500 billion rupees from the sale of its stake in the combined company, which could pay part of the EGR fees.

Indus Towers is a three-way joint venture between Bharti Infratel, the UK-based Vodafone Group and Vodafone Idea, with the first two each holding 42 percent. Vodafone Idea has 11.15 percent and the remaining 4.85 percent is with the private equity firm Providence. The US-based asset management company is likely to sell shares in Indus Towers together with Vodafone Idea for around 2,000 rupees.

Bharti Airtel has a majority stake (53.51 percent) in Bharti Infratel.

The merger of Bharti Infratel and Indus was approved prior to the February 24 deadline and extended by Bharti Infratel in December until approval. The contract that establishes the world's second largest telecommunications tower company was signed on April 23, 2018.

KKR and the Canada Pension Plan Investment Board are expected to jointly own 6 percent, which is due to their over 10 percent stake in Bharti Infratel.