Ahead of Merger, Vodafone and Idea Sell Standalone Tower Businesses to ATC Telecom for $1.2 Billion

India’s second and third largest telcos by subscribers, Vodafone India and Idea Cellular, 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, an official statement said. The transaction is expected to take place during the first half of the calendar year 2018.

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Idea will sell its entire stake in ICISL, and Vodafone India will sell a business undertaking to ATC TIPL. Upon completion of the sale of tower businesses, Vodafone India will receive $592 million and Idea will receive $615 million. The transaction will help both the companies to strengthen the balance sheet of the combined business.

“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.

Vodafone and Idea have a combined portfolio of around 20,000 towers with a combined tenancy ratio of 1.65x as at 30 June 2017.

“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,” according to an official statement read.

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.

Both the telcos are currently in the process of merging operations. The merger, expected to be completed in 2018, is awaiting various approvals. In March 2017, Vodafone India and Idea Cellular announced the merger, which will create India’s leading operator worth more than $23 billion with a 35 percent market share. This merged entity will become a serious threat to Bharti Airtel, but with the recent merger with Tata Teleservices, Airtel is now up for the fight.

Under this merger, Vodafone India will get an implied enterprise value of Rs. 82,800 crores and Idea Rs. 72,200 crores. After the merger, Vodafone India will have 45.1% stake, whereas Idea Cellular will have 26 percent after paying Rs 3,874 crore cash for a 4.9 percent stake. And the remaining 28.9% will be held by other shareholders. The merger will be completed by March 2018.

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9 Comments on "Ahead of Merger, Vodafone and Idea Sell Standalone Tower Businesses to ATC Telecom for $1.2 Billion"

 

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Abhijit
November 15, 2017 5:08 pm 5:08 PM
Idea getting worst.. Ahead of merger bwith Vodafone breaks intercircle roaming 3G agreement for Maharashtra Idea 3G users.. I having Idea 3G using since from 5-7yrs. And while in Mumbai roaming was used to latch on Vodafone 3G but from 10 Nov 2017 I am unable to get 3G access while Mumbai roaming in spite of Daily 1GB pack activated. Only Idea 4G & 2G is available now.. IDEA 4G coverage is worst in Mumbai so now always on 2G mode with slow internet. Why removed 3G roaming for Maharashtra circle user in Mumbai don’t know? Anybody here facing same?… Read more »
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Nikhil
November 15, 2017 8:05 pm 8:05 PM

Same is happening is with me!!!!! But Vice versa is not true I guess!!!!! Does Vodafone have 3G in Maharashtra?

Abhijit
November 15, 2017 9:48 pm 9:48 PM
Vodafone is having best 3G network all across Maharashtra. And Vodafone is complete 2G/3G/4G all technology available network in both Mumbai & Maharashtra circle. Even Airtel has all 2G/3G/4G in both circles. Only Idea don’t have own 3G network in Mumbai circle but has all 2G/3G/4G in MH circle so for Mumbai roaming was providing 3G on partner Vodafone network but now from past week it is not getting selected. Indeed very bad move. This decision if not roll back then Idea which is not famous in Mumbai circle then Idea users of MH circle who travels daily to Mumbai… Read more »
Prithvi
November 13, 2017 8:51 pm 8:51 PM

Vodafone India is correct in selling these because the next three years are going to be crucial for their existence so they need to be frugal.

KSharma
November 13, 2017 4:45 pm 4:45 PM

Will the new merged entity will be named as Vodafone or idea ? Or a complete new name ?

Kaushik
November 13, 2017 9:34 pm 9:34 PM

Don’t worry, right now even vodafone and idea do not know.

In fact, should the merger fail, Idea too will go the way of RCom and Aircel.

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