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by IANS |
New Delhi, Feb 21 (IANS) The Department of Telecommunications on Friday approved the long-pending merger of Bharti Infratel with Indus Towers to help both telcos, particularly Vodafone Idea, to sell their stakes in the entity to raise funds.
Official sources said the approval has been given to the merger without any conditions.
The deal was stuck as DoT held the FDI approval in abeyance due to a Rs 22,000 crore withholding tax dispute between UK's Vodafone Group and India.
This approval was key for merger of the two tower companies and in turn, crucial for Vodafone Idea to divest its stake and raise funds.
The combination of Bharti Infratel and Indus Towers will create a tower company with over 163,000 towers, operating across all 22 telecom service areas. The combined entity will be the largest tower company in the world after China.
Vodafone Idea faces the most crucial survival issue to raise funds to pay AGR dues to the government. DoT has sought Rs 53,000 crore from it as pending AGR dues and so far it has paid Rs 3,500 crore and for remaining, it is assessing the amount.
Airtel, which has AGR dues of Rs 35,500 crore, has paid Rs 10,000 crore but is at a relatively comfortable position.
Loss-making Vodafone Idea has been looking forward to this tower merger deal closure to raise roughly Rs 4,500 crore from the sale of its stake in the combined entity, which could be used to pay a portion of its AGR dues.
Indus Towers is a three-way joint venture between Bharti Infratel, UK-based Vodafone Group and Vodafone Idea, with the first two holding 42 per cent each. Vodafone Idea has 11.15 per cent and the remaining 4.85 per cent is with private equity firm, Providence. The US-based asset management firm is also likely to join Vodafone Idea in selling stakes in Indus Towers for roughly Rs 2,000 crore.
Bharti Airtel owns a majority stake (53.51 per cent) in Bharti Infratel.
The Bharti Infratel and Indus merger was approved ahead of the February 24 deadline, extended by Bharti Infratel in December pending the approval. The deal, which creates the world's second largest telecom tower firm, was signed on April 23, 2018.
KKR and the Canada Pension Plan Investment Board are expected to own a combined 6 per cent, stemming from their stake of over 10 per cent in Bharti Infratel.
