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Bharti Infra sets December 24 deadline for merger with Indus Towers

The board of Bharti Infratel has extended the deadline to complete the merger with Indus Towers by 60 days to December 24, but said that dilution of shares by existing holders will be lesser than earlier announced, thus also lowering the cash to be paid to Vodafone Idea on the telco’s possible exit from the merged entity.

Bharti Infratel on October 25 said it has extended the deadline for its merger with Indus Towers by two months to December 24 while considering regulatory uncertainty looming over the deal.

The delay in the deal will also result in a lower payment to Vodafone Idea for its around 11.15 per cent stake, according to a regulatory filing by Bharti Infratel to stock exchanges.

It was expected that Vodafone Idea will get around Rs 5,500 crore from stake sale in Indus Towers.

“The Board of Directors, in its meeting held on October 24, 2019, has accepted the CoD’s recommendations to extend the long-stop date by 60 days i.e. till December 24, 2019, on the basis of agreements on closing adjustments and other conditions precedent for closing,” Bharti Infratel said.

The company said based on the net debt as on September 30, 2019, and such agreed closing adjustments, it is expected that the dilution of equity stake held by the current shareholders of Bharti Infratel shall be lower. This is on account of a lesser number of shares to be issued against swap of Indus shares vis-a-vis the illustrative shareholdings disclosed in the original transaction announcement.

” These would also result in lower cash payments to Vodafone Idea vis-a-vis the illustrative amounts disclosed earlier. Since the completion of the merger is contingent upon receipt of requisite regulatory approvals and fulfilment of other conditions precedent, there can be no assurance that the merger can be completed within the extended time-frame, ” the filing said.

In April 2018, Bharti Airtel, Idea Cellular and Vodafone Group had announced an agreement for the merger of mobile tower company Indus Towers and Telecom infrastructure firm Bharti Infratel to create the largest mobile tower operator in the world outside China. It will have over 163,000 towers across 22 telecom service areas in India.

As per the original deal structure, Vodafone was to be issued 783.1 million new shares in the merged entity in exchange for its 42 per cent stake in Indus Towers, and this could take its holding to 29.4 per cent in the new company depending on the options finally taken by Idea and Providence.

Similarly, Airtel’s stake in the new combined tower behemoth was too diluted to 37.2 per cent in the combined entity from 53.5 per cent it currently holds in Bharti Infratel. The transaction at the time of deal announcement valued Indus Towers at an enterprise value of Rs 71,500 crore.

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