Bharti Infratel extends deadline, to merge with Indus Towers by Dec 24

New Delhi: Bharti Infratel has extended the deadline for its merger with Indus Towers by two months to December 24 in view of the looming regulatory uncertainty over the deal. In a regulatory filing to the stock exchanges, Bharti Infratel said that the delay in the deal will also result in a lower payment to Vodafone Idea for its 11.15 percent stake. Vodafone Idea was expected to get around Rs 5,500 crores from stake sale in Indus Towers.

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

'No assurance that merger can be done within extended time-frame'

Bharti Infratel said that based on the net debt, as on September 30, 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, the document said.

"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," it added.
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The backdrop

Bharti Airtel, Idea Cellular and Vodafone Group had signed an agreement for the merger of Indus Towers and Bharti Infratel in April 2018 to create the largest mobile tower operator in the world outside China. The emerged entity will have over 1,63,000 towers across 22 telecom service areas in India.

According to the original deal structure, Vodafone would receive 783.1 million new shares in the merged entity in exchange for its 42 percent stake in Indus Towers, and this could take its holding to 29.4 percent in the new company depending on the options finally taken by Idea and Providence.

Airtel's stake in the merged entity, on the other hand, would come down to 37.2 percent from 53.5 percent it currently holds in Bharti Infratel.