In a joint statement, the two companies said Idea will sell its entire holding in Idea Cellular Infrastructure Services Ltd (ICISL) while Vodafone will divest its business undertaking to ATC Infra.
"In the event that the completion of the sale of the standalone tower businesses precedes the completion of the proposed merger of Vodafone India and Idea, Vodafone India will receive Rs 3,850 crore (USD 592 million) and Idea will receive Rs 4,000 crore (USD 615 million)," the statement added.
The deal is expected to be completed by the first half of 2018.
The standalone tower businesses of Vodafone and Idea comprise a combined portfolio of nearly 20,000 towers.
The tower deal will not affect the merger terms of the two companies.
"The receipt of these proceeds prior to completion was anticipated and provided for in the merger agreement and hence would not affect the agreed terms of the Vodafone India and Idea merger, including the amount of debt which Vodafone will contribute to the combined company at completion," it added.
The sale of tower business is subject to regulatory and other approvals.
Earlier this year, Vodafone India and Idea had agreed to merge their operations to create the country's largest telecom operator worth of more than USD 23 billion with a 35 per cent market share.
Vodafone India MD Sunil Sood had earlier said the merger of the two companies was on track for completion in 2018.
The combined entity of Vodafone India and Idea Cellular, which are currently India's number 2 and 3, respectively, would dislodge Bharti Airtel to counter the bruising price war in the worlds second-largest telecom market.
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