Bharti Airtel to sell off stake in Infratel

Airtel will reduce its stake in the towers business, in order to free up cash for its 5G network rollout
Indian mobile network operator, Bharti Airtel, is to lower its stake in towers firm, Bharti Infratel, downgrading its stock holding from 50.33 per cent to just 18.33 per cent.

Markets reacted positively to the news, with Bharti Airtel’s share price surging 15 per cent since news of the divestment broke, two days ago.

A statement released by Bharti Infratel said that the transaction was expected to take place on or after the 18th March 2019.

The stake will be purchased by Airtel’s subsidiary, Nettle Infrastructure Investments.

With Indian telcos desperately trying to mitigate costs and free up cash for their impending 5G rollouts, Airtel has announced a series of cost saving strategies in recent months.

Earlier this month, Airtel announced that it was considering launching a joint venture with the newly formed Vodafone Idea, to oversee the company’s FTTH and fibre backhaul offering.

India’s telecoms sector remains one of the most competitive in the world, with operators trading on wafer thin margins.

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Airtel, Vodafone-Idea fibre JV a business opportunity for PE funds

The firms would want to demerge their fibre assets and give it to a third company, making their balance sheets lighter and providing an annuity stream for investors.
Bharti Airtel’s decision to partner Vodafone Idea has come as a business opportunity for private equity funds keen on investing in the optical fibre space for leasing assets to earn rentals in return.

The optical fibre synergies will be on the lines of the tower business where the two companies will hive off the fibre assets to a third company, which will in turn lease them out.
Analysts believe that it is a balance sheet light approach for the companies which are under financial stress at the moment. In the current environment, the companies would want to demerge their fibre assets and give them to a third company for making their balance sheets lighter. As far as PE funds are concerned, it would be an annuity business for them.

Bharti Airtel chairman Sunil Bharti Mittal said on Tuesday that his company was looking at an optical fibre joint venture with Vodafone Idea to take on Reliance Jio.

“We made an invitation. We did that in towers – if you remember, Indus Towers was created. And on the same lines, we have asked Vodafone Idea to come and join the fibre company,” Mittal told reporters on the sidelines of the Mobile World Congress in Barcelona (Spain).

On January 7, 2008, Vodafone Essar, a subsidiary of Vodafone Group, Bharti Infratel and Idea Cellular, said it formed an independent tower company, Indus Towers Limited, to provide passive infrastructure services in India to all operators on a non-discriminatory basis.

The three companies merged their existing passive infrastructure assets at 16 circles in the country. Vodafone and Bharti own approximately 42% each in the company, Idea Cellular holds 11.15% and the remaining 4.85% is held by private equity firm Providence. Indus Towers is an independently managed and operated company, offering services to all telecom operators and other wireless service providers such as broadcasters and broadband services providers.

The idea behind the formation of Indus Towers was enabling telecom operators to reduce operating costs through economies of scale.

In April 2018, Bharti Infratel Ltd, the tower arm of Bharti Airtel and Indus Towers, agreed to merge its businesses to create the world’s largest tower company after China.

The combined entity will own more than 163,000 towers.

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Now, Reliance Jio set to disrupt telecom tower industry

After creating disruption in the telecom sector, new player Reliance Jio’s unit may become a potential competitor for the tower industry, especially Bharti Infratel, analysts say.

Jio has around 2,20,000 towers and 3,00,000 kilometres of optical fibre. The company’s Board of directors had given the approval for hiving off these assets in December.

“Jio is in the process of demerging its tower and fibre into a separate company. Jio will lease the infrastructure and will look to raise funds in these companies… assets and part of the debt will move to these companies, making Jio asset-light. Part of the future capex will also move. Jio is also open to sharing its tower and fibre with the competition. While we look forward to more details, this can be a potential competitor for Bharti Infratel,” BNP Paribas said in an analyst note after the telecom firm announced its third quarter results last week.

Bharti Airtel along with incumbents Vodafone India and Idea Cellular – now Vodafone Idea after their merger – have been impacted financially after the arrival of Reliance Jio that disrupted the market its free voice calls and dirt-cheap data tariff offers.

An increased user base coupled with a surge in data usage had helped the newest telecom player Reliance Jio Infocomm (Jio) post a 65% increase in its net profit at Rs 831 crore for the third quarter ended December 2018.

Jio has also set its eyes on the broadband and enterprise segment as they offer huge opportunities. It has announced the acquisition of three multiple system operators (MSOs) which is awaiting regulatory clearances and will provide it infrastructure and manpower.

Credit Suisse in a note said Jio intends to hive off tower and fibre assets and get outside investors in to reduce overall debt levels. “This effectively punctures hopes of tariff increases for other telecom players.”

Though Jio has indicated its tower footprint is potentially larger than the largest tower operator in the country (Indus at around 1,20,000), in a three-player market, there is little strategic merit for three large independent tower companies to co-exist, Goldman Sachs analysts said.

The other two companies are Bharti Infratel and American Tower Corporation. Bharti Airtel and Vodafone Idea also jointly own tower company Indus Towers, which is in the process of merging with Bharti Infratel.

“Entry of a new tower co could potentially result in pressure on Infratel’s rentals unless we see further consolidation in the tower space,” it said.

Recently, Bharti Airtel and Vodafone Idea also hived off their fibre assets, 2,46,000 route km and 1,56,000 route km respectively, into separate units. While Vodafone Idea plans to monetise the fibre assets, Airtel is looking to form an independent fibre company and could also monetise its holdings in the unit.

Analysts say Jio is not in a hurry to raise tariffs until it meets its target of 400 million users. At the end of December, its subscriber base stood at 280.1 million.

“Jio’s focus in the near term remains on adding subscribers and it said it would not tinker with tariffs and risk disrupting their strong subscribers’ momentum. For incumbent telcos, this could mean revenues staying stagnant until Jio reaches its earlier stated target of around 400 million users… the Rs 501 JioPhone plan could continue being offered for the foreseeable future and we forecast 302 million subscribers for Jio by end of FY19,” analysts at Goldman Sachs said.

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Interference Mitigation Filters Market to Register Steady Growth During 2018-2028

Future Market Insights has announced the addition of the “Interference Mitigation Filters Market: Global Industry Analysis and Opportunity Assessment, 2018-2028″report to their offering

In today’s highly competitive marketplace multiple sectors, industries, and business process are undergoing with new technologies and innovations, such factors are positively supporting the growth of interference mitigation filters market. With the aid of modern telecom technologies, the interference mitigation filters are becoming popular among the several industries. The growing penetration of automated network filtering is towering the growth of interference mitigation filters market. Interference mitigation filters provide a simple, cost effective and low loss solution for minimizing spectral emissions and attenuating interference signals preventing them from limiting receiver performance whilst retaining the maximum use of the spectrum available. In order to improve densification of radio spectrum, network services providers are adopting interference mitigation filters. Such factors are projected to fuel the growth of interference mitigation filters market across the world.

Interference mitigation filters are generally used to eliminate radio interference with co-located transceivers. Interference mitigation filters are generally installed in telecom, IT, automotive, and healthcare industries. In parallel, integration of industry 4.0 across the world is anticipated to drive the growth of interference mitigation filters market. In many industries IoT and other process optimization equipment are taking place. These factors will create potential growth opportunities for the interference mitigation filters market in near future. Apart from this, rising industrial automation and advancements in telecom industry are also key growth factors of interference mitigation filters market across the world.

Interference Mitigation Filters Market: Drivers and Challenges


The major growth drivers of the interference mitigation filters market include increasing demand of high speed broadband connectivity and advancements in telecom industry. In addition, Use of interference mitigation filters in various industry verticals shall drive the growth of interference mitigation filters market. Advancements in various industries across the globe has led to growth of the interference mitigation filters market. Furthermore, the global push for efficient and optimize network connectivity is one of the primary factors fuelling the growth of interference mitigation filters market.

Apart from this, the rising trend of industrial automation is the major factors driving the growth of interference mitigation filters market.


However, issues such as lack of technological development in developing countries, acts as a restraining factor for the interference mitigation filters market. Moreover, the high integration cost of an interference mitigation filters is one challenge for the growth of interference mitigation filters market.

Interference Mitigation Filters Market: Segmentation

Segmentation of Interference Mitigation Filters Market on the basis of Product Type

Field reconfigurable Interference Mitigation Filters
Switchable Interference Mitigation Filters

Segmentation of Interference Mitigation Filters Market on the basis of Vertical:

Banking, Financial Services, and Insurance (BFSI)
Government and Public Sector
Healthcare and life sciences
Retail and consumer packaged goods

Interference Mitigation Filters Market: Competition Landscape

Key Players

The Prominent players in interference mitigation filters market are Radio Frequency Systems, TTI, Inc., API Technologies Corp, Radio Design UK Ltd, Filtronic plc, and others interference mitigation filters manufacturers.

Interference Mitigation Filters Market: Regional Overview

On geographic basis, North America is anticipated to capture the largest market share in terms of revenue, owing to the early adoption of 5G in the region. APAC is expected to exhibit high growth rates in terms of revenue in interference mitigation filters market due to rapid digitalization and rise in technologies and telecom organization which offers better customer experience. Europe and Latin America also offers potential growth opportunities in interference mitigation filters market due to the increasing demand for interference mitigation filters in various enterprises in order to improve network connectivity.

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Jio may surpass Airtel’s India mobile revenue for first time

While Jio may log profit growth for 5th quarter in a row, VIL & Airtel may post losses: Analysts

Reliance Jio is expected to surpass Bharti Airtel’s India mobile revenue for the first time, in the quarter ended December 2018, while posting yet another net profit growth, boosted by strong subscriber additions, say analysts.

In contrast, India’s new telecom market leader Vodafone Idea and second-largest Bharti Airtel are likely to report sizeable losses on higher costs, despite a slower decline in revenue, helped by an expected turnaround in average revenue per user (ARPU) as their minimum recharge plans start to take effect, analysts add.

For Vodafone Idea, brokerage ICICI Securities estimated a net loss of ₹4,001.7 crore in the fiscal third quarter, narrower than the ₹4,974-crore loss in the July-September period, as benefits of synergies start to kick in. The newly-formed telco—born out of the recent merger of Vodafone India and Idea Cellular—will present consolidated earnings the second time.

VIL’s revenue in the December quarter is estimated to be in the ₹11,414-11,703 crore range by brokerages Credit Suisse and ICICI Securities. This compares with over ₹12,000 crore revenue in the July-September period.

Brokerages expect Sunil Mittalled Bharti Airtel to report a net loss in the range of ₹649 crore to ₹1,141 crore—a first in nearly 16 years. The company eked out a surprise ₹119 crore net profit on a consolidated basis in the September quarter, helped by a one-time exceptional gain, but its India losses had worsened.

Bharti Airtel’s revenue is estimated to be in the ₹20,428-20,447 crore range for the December quarter.

Jio is estimated to report its fifth successive quarter in the black, with ICICI Securities pencilling in a 49% on-year jump in the company’s net profit to ₹751 crore, driven by an “estimated 30.7 million subscriber adds”. The brokerage estimates Jio’s December quarter revenue to grow nearly 12% sequentially to ₹10,327 crore, which, it said, would for the first time be higher than Airtel’s India mobile revenue.

Brokerages Credit Suisse and Kotak Institutional Equities have estimated Bharti Airtel’s India mobile revenue to be in the ₹997-10,148 crore range in the fiscal third quarter. “Wireless revenue (for Bharti Airtel and Vodafone Idea) will continue to decline in Q3 albeit at a slower rate in wake of steps taken by companies to improve their ARPU by improving ARPU from low-end customers,” said brokerage Axis Capital.

India’s two older telcos’ October launch of minimum recharge plans—aimed at weeding out nonrevenue generating low-end users and improving ARPU—will start showing some positive impact though the full effect will be visible in the January-March quarter, analysts said.

ICICI Securities estimates Airtel and VIL’s monthly ARPU, a key performance metric, to rise 3.3% and 1% on-quarter to ₹103 and ₹89, respectively, in the third quarter FY19. Jio’s ARPU, it estimates, will fall 2.3% on-quarter to ₹129, due to a higher mix of 4G feature phone users.

Axis Capital expects Airtel to have lost around 10 million subscribers in the fiscal third quarter. Vodafone Idea has lost nearly 14 million customers in October and November 2018 alone, according to latest subscriber data collated by the telecom regulator and Cellular Operators Association of India (COAI).

“Stagnant industry revenue, market share gains by Jio coupled with increase in network expansion costs should hurt mobile Ebitda for Bharti, although this will be largely offset by strong Africa numbers,” Credit Suisse said.


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DoT rejects RCom-Jio spectrum trading deal

MUMBAI: The telecom department told Reliance Communications (RCom) and Reliance Jio Infocomm on Tuesday that it can’t approve their deal to trade airwaves as it does not conform to its guidelines, dealing a big blow to the Anil Ambani-owned telco’s efforts to repay creditors and avoid insolvency proceedings.

The dramatic development follows Jio’s letter to the department of telecommunications (DoT), written on Friday, where it sought assurance from the government that it won’t be held liable for RCom’s past dues related to airwaves. This is not in accordance with the government’s spectrum trading norms, which stipulate the buyer is liable for dues that haven’t been recovered from the seller.

“The trading rules clearly say DoT can ask both the operators or any one of them to pay the dues. Since Jio has imposed conditions, we cannot accept it (the deal) as it goes against the guidelines,” said a senior DoT official.

“Now the ball is in their court. They have to decide and come back to us. Till then, this deal is off the table,” the official added.

Both RCom and Jio did not respond to ET’s queries. RCom shares closed at Rs 15.78, up 0.77%, on the BSE on Tuesday. The rejection of the spectrum trading deal will constitute a setback to RCom’s efforts to settle with Ericsson. The deal was supposed to fund RCom’s Rs 550-crore plus payment to the Swedish telecom equipment maker.

RCom has already missed the Supreme Court-mandated December 15 deadline for payment to Ericsson. It now faces the prospect of being dragged back into insolvency proceedings, besides a revival of a contempt of court petition against its chairman Anil Ambani, who had stood guarantee for timely payment to Ericsson.

The Supreme Court had directed DoT to approve the spectrum trading pact and accept a Rs 1,400 crore corporate guarantee, instead of a bank guarantee, as well as a parcel of land from a RCom subsidiary to cover the spectrum user charge (SUC) claim of Rs 2,947 crore, which the Anil Ambani-owned company is currently disputing.

The telecom department was of the view that in case there is any issue with the corporate guarantee or land parcel, Jio — being the buyer — would have to step in and make the payments. But Jio has disowned any such liability.

JIO submitted trading pact
In the letter, the company has said the spectrum trading agreement — which would have seen RCom sell 122.4 MHz of airwaves to Jio — stipulates that the company owned by Mukesh’s younger brother Anil would provide bank guarantees to the telecom department for all disputed claims.

Sources said Jio had even submitted the trading agreement between the two telcos, which states that RCom will provide bank guarantees to DoT against its spectrum dues.

RCom’s spectrum sale agreement with Jio was struck in late 2017 and was central to its plan to pare its Rs 46,000-crore debt by Rs 18,000 crore.

The tussle with DoT started when the department demanded spectrum dues worth Rs 2,947.68 crore as a pre-condition for approving the deal, which was opposed by RCom. After various twists and turns, the Supreme Court directed DoT to accept the corporate guarantee from Reliance Realty, a unit of RCom, as surety for the disputed amount and give its approval to the deal.

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Airtel, Reliance Jio or Vodafone Idea? No clear winner in India’s telecom wars

New Delhi: Six months ago, Bharti Airtel Ltd was the undisputed leader in India’s telecom market with the largest subscriber base, highest profit and maximum revenue market share. The entry of Reliance Jio Infocomm Ltd however resulted in a bruising tariff war, which forced even a large corporate house like the Tata Group to exit the industry. Following a year-long consolidation, only two other private players were left in the field—Bharti Airtel and entity resulting from the merger of Vodafone India and Idea Cellular.

Although the dust in the telecom battleground has settled largely with three players remaining, the sector is at the cusp of an anomaly with no clear market leader emerging on key growth metrics and no distinct industry hierarchy in sight.

Sample this. Vodafone Idea Ltd, India’s largest telecom operator by users and revenue market share, is also the only loss-making company among the three—posting a ₹4,970 crore loss in the September quarter. Reliance Jio, which had 252 million subscribers compared with Vodafone Idea’s 435 million as of end-September, made a profit of ₹681 crore in the same period.

The third player, Bharti Airtel, saw revenue from its India business fall 11% on-year in July-September. It lost 2.3 million users in September alone when Reliance Jio added 13 million.

So, who is the real number one telecom company?

“Vodafone Idea may have the most subscribers and revenue market share but clearly can’t be called the number one player or the industry leader if you look at all the parameters,” a Mumbai-based analyst said, requesting anonymity.

The Cellular Operators Association of India (COAI) believes this abnormality is because of industry dynamics, which changed after the entry of Reliance Jio in September 2016. “The fundamental issue is that the industry has transformed from a voice-only network to an all-data network. The whole network has got more complex. As a result, we are wondering what are the right metrics to look at,” COAI director general Rajan Mathews said.

The lobby group believes that in the current situation, the amount of data flowing on the network and the operator’s 4G coverage would be better metrics. “4G capacity will determine tomorrow’s leader. Who has the most subscribers is not a relevant metric anymore,” Mathews said.

On 4G coverage, Reliance Jio is targeting 99% population coverage by March. Airtel has over 90% 4G coverage with an aggressive plan to grab the user’s primary 4G SIM slot. Vodafone Idea is the laggard with 50% 4G coverage. It plans to cover 70% of the country in the next six months, and 80% in 2019-20.

“Airtel and Jio are best placed to grab the low-hanging fruits and quickly upgrade customers from 2G to 4G in areas where Vodafone Idea doesn’t offer 4G currently,” an industry executive said requesting anonymity.

Jio’s 4G user base of 252 million is almost twice of Airtel and Vodafone Idea combined.

“At this time, it is not quite clear which is the industry leader among telecom operators. But this should change over a year or two as the competition is forcing telcos to focus on their product and marketing,” said Amresh Nandan, vice president and analyst (tech industry), Gartner. “The fight for the lead position would eventually not be based on subscriber size but revenue, profitability and even quality of revenue.”

Vodafone Idea is deploying technologies to handle 2G spectrum refarming to 4G.

With plans to raise up to ₹25,000 crore, Vodafone Idea also faces spectrum liabilities of ₹3,000 crore due in March and an additional ₹12,000 crore due in the middle of the next financial year, Credit Suisse said in a note on 22 November.

ALSO READ | Vodafone Idea, Airtel, Reliance Jio must agree on stress for spectrum relief

Airtel is focusing on better-paying customers while Reliance Jio is adding millions of subscribers every month by promising them the cheapest tariff.

“There is an aggressive new entrant (Jio), a mature player (Airtel) and a third player which is going through strenuous amalgamation (Vodafone Idea). The industry will have to wait for at least a year before getting a clear hierarchy in place,” Mathews said.

This isn’t a sprint any more. It is a marathon.

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Bharti Infratel and Indus Towers Merger: CCI Grants Clearance

Bharti Infratel, the tower subsidiary of Bharti Airtel, is set to undergo a merger with Indus Towers for which both the companies have obtained clearance from Competition Commission of India (CCI). Post the merger, both the companies will fuse to form $14.6 billion entity owning 1.63 lakh towers, a massive figure speaking even from global standards. This approval from CCI is the first of many which both the companies will need to have it under them if they want to move ahead with the merger. In addition to the CCI clearance both the companies will need the Securities & Exchange Board of India, National Company Law Tribunal and the department of telecommunications (DoT) to sign off on the merger. While the others will look into different aspects of the merger, DoT will sign off on the FDI aspect of the combined entity.

Bharti Airtel in its official statement said “Pursuant to Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, we are pleased to inform you that approval of Competition Commission of India (CCI) has been received for the proposed merger of Bharti Infratel Limited and Indus Towers Limited.”

Interestingly, the company which is going to merge with Bharti Infratel, Indus Towers counts Bharti Airtel, Idea Cellular and Vodafone India as its shareholders. As such, this merger is going to mean enhanced control over towers and monetisation of their stakes in the company during present tough times. This move might prove beneficial for all the three telcos since the telecom sector is in a condition of unrest, the reason being heavy losses and poor financials. Current stake-holding in Indus Towers comprises of Bharti Infratel (42%), Vodafone (42%), Aditya Birla’s Idea group (11.15%) and Providence (4.85%).

As per the current stipulated timeline, the merger process will finish before the end of FY 2018-19.

Idea Cellular, which holds 11.15% in Indus will have the option of getting a 7.1% stake in the new company, or it will also be able to sell out for Rs 6,500 crore. Idea Cellular had earlier said it would exit the tower unit. Being equal shareholders in Indus, Bharti Airtel and Vodafone will take control of the merged entity proclaiming equal representation in board too.

A lot of structure and stakeholding of the company will be dependent on Idea’s decision to retain or sell the shares. Depending on that, Bharti Airtel will own either 37.2% or 33.8% in the combined entity, and Vodafone will hold 29.4% or 26.7%. On the other hand, private equity major KKR and Canada Pension Plan Investment Board (CPPIB) will together own 6%. Providence will retain a minimum 1.1% or opt to maintain its full stake in the combined company, which will be 3.1%. The remaining shareholding will be up for the public.

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India needs 100,000 telecom towers to cater to the rising data demand

Despite a consolidation in the telecom sector, India needs around 100,000 additional towers to take care of the growing data and voice requirements. The country currently has about 461,000 mobile towers for a customer base of 1.18 billion.

The world’s second-largest telecom market is undergoing consolidation with operators either merging with larger players or closing operations altogether.

Tower companies, which lost thousands of co-locations per tower leading to drop in revenues, too are seeing the impact of consolidation. Due to the changed scenario in the sector, Bharti Infratel and Indus Towers last month announced a merger creating the world’s second largest tower firm.

However, if the figures are compared to China, which is the world’s largest telecom market, a totally different picture emerges. China has over 1.94 million telecom towers for a customer base of 1.4 billion. China Tower Corporation alone has about 1.9 million towers and the remaining 40,000 to 50,000 towers are owned by smaller firms. In contrast, the merged entity of Bharti Infratel-Indus, which is the world’s second largest tower company after CTC, will have a portfolio of 163,000 towers.

India lags far behind China in terms of investments too. Sectoral regulator Telecom Regulatory Authority of India (Trai) has been raising the issue of insufficient investment in infrastructure as the reason for call drops, a charge refuted by telecom operators. The upcoming National Telecom Policy aims to garner an investment of $100 billion in the telecom sector in five years.

“We did a comparative benchmarking with China, which has consistently spent $70 billion on telecom infrastructure per year for the past many years. We have invited $100 billion in five years. In my view, $100 billion is actually a slight underestimation. If we really want to create next-generation infrastructure, India must create a framework where we can have significant investments coming into the sector,” Telecom Secretary Aruna Sundararajan said recently.

The telecom sector in India has a huge scope for growth as the country has touched only 30 per cent broadband penetration and 70 per cent of the growth still remains to be tapped.

With the expansion of 4G, 5G, Artificial Intelligence, Virtual Reality, Internet of things and M2M etc, the country is set to witness a multi-fold growth of data which will necessitate the installing around 100,000 mobile towers across the nation in the near future,” Tilak Raj Dua, Director General, Tower and Infrastructure Providers Association (TAIPA) said.

Dua added that India extends telecommunication services to more than 1.1 billion subscribers through 461,000 mobile towers, mounted with around 1.8 million base tower stations (BTSs), as of May 2018. Approximately, 90 per cent of these total mobile towers are shared among service providers.

“While in China, there are over 1.9 million mobile towers (as per the tower exchange data), we believe, out of the total only around half a million mobile towers are shared among TSPs. The sharing of mobile tower companies in China have recently realised the significance of the sharing model, emulating the Indian success story”, Dua added.

In India, the sharing concept started in 2005. Under the sharing concept, the towers are shared on a non-discriminatory and transparent basis. The concept has advantages such as efficient use of capex, improved aesthetics, faster rollouts, energy savings, and better coverage quality.

“India is the first market to develop and adopt this model, after which it has been emulated globally and is a Harvard business School case study,” Dua signed off saying.

Bharti Airtel Approves the Merger of Indus Towers and Bharti Infratel

Bharti Airtel has now approved the merger proposal of Bharti Infratel and Indus Towers, creating a listed pan-India tower company. The combination of Bharti Infratel and Indus Towers by way of a merger will create a pan-India tower company, with over 163,000 towers, operating across all 22 telecom circles in India. The combined company will be the largest tower company in the world outside China, read a media statement. The combined company will be named as Indus Tower Limited and will continue to be listed on the Indian Stock Exchanges going forward. The merger is now subject to approvals from the relevant regulatory authorities, including from CCI, SEBI, NCLT, DoT (FDI approval), approval from Bharti Infratel’s shareholders, necessary corporate approvals from the companies involved, as well as closing conditions. The transaction is expected to complete before the end of the financial year ending March 31, 2019.

Indus Towers is currently jointly owned by Bharti Infratel (42%), Vodafone (42%), Idea Group (11.15%) and Providence (4.85%). They today announced that they have agreed to merge Vodafone’s, Idea Group’s and Providence Equity Partners’ respective shareholdings in Indus Towers Limited into Bharti Infratel, creating a combined company that will own 100% of Indus Towers. Post the transaction, the combined company’s equity value would be Rs 965 billion.

That said, the combination of the two highly complementary footprints will create a tower operator with the ability to offer the high quality shared passive infrastructure services needed to support the pan-India expansion of wireless broadband services using 4G/4G+/5G technologies for the benefit of Indian consumers and businesses. And the media statement also read that the move will also help in the delivery of Government of India’s vision of ‘Digital India’.

Idea Group has the option to either sell its 11.15% shareholding in Indus Towers for cash based on a valuation formula linked to the VWAP for Bharti Infratel’s shares during the 60 trading days prior to completion of the merger, which, if calculated at the time of this announcement, would equate to a cash consideration of Rs 65 billion. Alternatively, Idea Group will receive new shares in the combined company based on the Merger Ratio. All the proceeds from the sale of the 11.15% stake will be for the benefit of the entity resulting from the merger of Vodafone India and Idea Group.

Speaking about the Providence, it has the option to elect to receive cash or shares for 3.35% of its 4.85% shareholding in Indus Towers, with the balance exchanged for shares.

Vodafone will be issued with 783.1m new shares in the combined company, in exchange for its 42% shareholding in Indus Towers. On the basis that Providence decides to sell 3.35% of its 4.85% shareholding in Indus Towers for cash, and Idea Group decides to sell its full 11.15% shareholding in Indus Towers for cash, these shares would be equivalent to a 29.4% shareholding in the combined company. The Transaction values Vodafone’s shareholding at Rs 284 billion.

If Providence decides to sell 3.35% of its 4.85% shareholding in Indus Towers for cash, and Idea Group decides to sell its full 11.15% shareholding in Indus Towers for cash, Bharti Airtel’s shareholding will be diluted from 53.5% in Bharti Infratel to 37.2% in the combined company.

Having said that, the final number of shares issued to Vodafone and the cash paid or shares issued to Idea Group and Providence, will be subject to closing adjustments, including but not limited to movements in net debt and working capital for Bharti Infratel and Indus Towers. To be noted, Bharti Airtel and Vodafone will jointly control the combined company, in accordance with the terms of a new shareholders’ agreement.