Vodafone India and Idea Cellular selling towers as part of merger plans
Vodafone Group announced on Monday that its India division and Idea Cellular have separately agreed to sell their respective standalone tower businesses in India to ATC Telecom Infrastructure for an aggregate enterprise value of INR 78.5bn.
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The FTSE 100 company said the standalone tower businesses of both itself and Idea were pan-Indian passive telecommunication infrastructure businesses, comprising a combined portfolio of approximately 20,000 towers with a combined tenancy ratio of 1.65x as at 30 June.
It said the transaction follows the 20 March announcement of the Vodafone India - Idea merger, in which both parties announced their intention to sell their individual standalone tower businesses to strengthen the balance sheet of their combined business.
Idea will sell its entire stake in ICISL, and Vodafone India will sell a business undertaking to ATC TIPL.
Both Vodafone India and Idea as customers, and ATC TIPL as a mobile network infrastructure provider, have agreed to treat each other as “long-term preferred partners”, the announcement read, subject to existing arrangements.
The parties would work together to further the expansion of high speed mobile networks in India.
After Vodafone India and Idea have completed their merger, around 6,300 co-located tenancies of the two operators on the combined standalone tower businesses would collapse into single tenancies over a period of two years without the payment of exit penalties.
In the event that the completion of the sale of the standalone tower businesses preceded the completion of the proposed merger of Vodafone India and Idea, Vodafone India said it will receive INR 38.5bn and Idea will receive INR 40bn.
“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,” Vodafone’s board explained in its statement.
“Completion of the transaction is subject to customary closing conditions and receipt of necessary regulatory approvals, and is expected to take place during the first half of calendar year 2018.”