NEW DELHI : Vodafone Idea has received the first ray of hope for survival with the department of telecommunications finally according a key approval for the merger of tower companies Bharti Infratel and Indus Towers.
This government approval for FDI enhancement was key for merger of the two tower companies and in turn crucial for Vodafone Idea to divest its stake and raise funds.
“The final FDI enhancement approval required for Indus-Infratel merger has come. This is a big positive for Vodafone Idea," a person aware of the matter said requesting anonymity.
“The merger should come through in a couple of weeks now. Vodafone Idea has 11.15% stake in Indus Towers which it plans to monetise after the tower merger. This stake sale could fetch Vodafone Idea about ₹4500 crore," the person said.
To be sure, the approval has come just days after Vodafone Idea chairman Kumar Mangalam Birla on Tuesday met telecom secretary Anshu Prakash followed by a meeting on Wednesday with finance minister Nirmala Sitharaman over concerns that DoT could resort to invoking bank guarantees of the telecom operator.
Raising funds is important for Vodafone Idea which owes ₹50,000 crore in past adjusted gross revenue dues to the DoT after an unfavourable court verdict in October that upheld the government’s definition of revenue based on which companies pay levies.
Emails sent to Vodafone Idea and DoT were not immediately answered.
A 24 October verdict of the Supreme Court upheld the department of telecommunications’ (DoT) definition of AGR and directed companies to pay licence fee and spectrum usage charge dues.
Vodafone Idea is the worst hit by the verdict. Its last-ditch efforts to earn a reprieve from the apex court on Monday failed after which it paid ₹2,500 crore the same day. Vodafone Idea paid an additional ₹1,000 crore on Thursday.
To be sure, the tower companies had announced their merger back in April 2018 but were waiting for DoT approval.
In fact, Bharti Infratel board had allowed two extensions of the long stop date, first on 24 October and second on 24 December, to secure more time to get nod for merger with Indus Towers.
The merger of Bharti Infratel and Indus Towers will create the world’s second largest tower company.
The two tower companies had in April last year agreed to merge their businesses. The combined entity will own more than 163,000 towers, second only to China Tower.
Under the proposed merger, Bharti Airtel, which currently owns 53.5 per cent in Bharti Infratel, will own stake between 33.8% and 37.2% in the merged tower entity, while Vodafone Plc will own between 26.7% and 29.4% per cent of the combine. However, Airtel and Vodafone Plc will have equal rights in the merged tower entity.
Vodafone Plc and Bharti Infratel Ltd hold 42% each in Indus Towers while Vodafone Idea Ltd owns 11.15% and US-based private equity fund Providence owns 4.85%.
No comments:
Post a Comment