Bharti Infratel gains on decision to proceed with Indus Towers merger

Bharti Infratel rose 3.18% to Rs 204.55 after the company said it will proceed with its proposed merger with Indus Towers.

Bharti Infratel said that its board, in a meeting held on Monday (31 August), decided to proceed with the scheme of arrangements for a merger with Indus Towers.

"After deliberations, the board has decided to authorize the chairman to proceed with the scheme and to comply with other procedural requirements for completion of the merger including approaching NCLT to make the scheme effective subject to certain procedural condition precedents," Bharti Infratel said in a statement.

As per the likely shareholding structure in the merged company, Vodafone may hold 28.2%, PEP 3.2%; total for Indus share swap 31.4% and current infratel shareholders 68.6%.

Vodafone Idea has decided to cash out by selling its 11.15% stake in Indus. "The above is basis cash consideration chosen by Vodafone Idea (VIL) for its 11.15% shareholding in Indus which will be based on 60 days VWAP as at closing date (and agreed closing adjustments). Based on today's calculation the cash consideration comes to approximately Rs 4,000 crore, said the company.

VIL and Vodafone Group Plc. have entered into certain security arrangements for payment obligations. This includes a combination of a security deposit by VIL, security via pledge of a certain number of shares of the merged company out of those issued to V Plc. and a corporate guarantee by V Plc. which can get triggered in certain situations and events, as per the statement.

These security arrangements remain subject to all applicable regulatory approvals and any approval of V Plc's lenders. The security arrangement will provide the merged company a payment cover of over one year for the operational payments due from VIL.

The scheme shall become effective on the date on which certified copy of the order of NCLT is filed with registrar of companies, the company added.

The deal was first announced in April 2018 to create the world's largest mobile tower operator outside China. The Department of Telecommunications (DoT) had cleared Bharti Infratel's merger deal with Indus in February this year. The new merged entity would become the world's largest telecom tower company with more than 1.63 lakh towers.

Bharti Infratel is a provider of passive telecom infrastructure and it deploys, owns and manages telecom towers and communication structures, for various mobile operators.

The company's consolidated net profit dropped 20.7% to Rs 703.60 crore on 5.2% fall in net sales to Rs 1,635.40 crore in Q1 June 2020 over Q1 June 2019.

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