Vodafone India, Idea to sell tower businesses to ATC for $1.2 billion

NEW DELHI: Vodafone India and Idea Cellular said that they have separately agreed to sell their respective standalone tower businesses in India to ATC Telecom Infrastructure Private (ATC TIPL) for an aggregate enterprise value of Rs 78.5 billion or $1.2 billion. Both India's second and third largest telcos are currently in the middle of their proposed merger, which is expected to be completed in 2018. The merger is currently awaiting various approvals from authorities.

At the time of announcement of merger in March, both telcos revealed their intention to sell their individual standalone tower businesses to strengthen the balance sheet of the combined business.

In the event that the completion of the sale of the standalone tower businesses precedes the completion of the proposed merger of Vodafone India and Idea, Vodafone India will receive Rs 38.5 billion or $592 million and Idea will receive Rs 40.0 billion $615 million.

"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," the statement read.

The transaction is expected to take place during the first half of calendar year 2018, and is subject to customary closing conditions and receipt of necessary regulatory approvals.

"After Vodafone India and Idea have completed their merger, ~6,300 co-located tenancies of the two operators on the combined standalone tower businesses will collapse into single tenancies over a period of two years without the payment of exit penalties," an official statement read.

Both the telcos have a combined pan-India portfolio of around 20,000 towers with a combined tenancy ratio of 1.65x as at 30 June 2017. The Aditya Birla Group-led telco will sell its entire stake in ICISL, and Vodafone India will sell a business undertaking to ATC TIPL, the statement said.

"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, subject to existing arrangements. The parties will work together to further the expansion of high speed mobile networks in India," an official statement read.