Bharti Infratel-Indus Towers Deal Suffers Setback Yet Again

Bharti Infratel has extended the deadline for closing Indus Towers mega-merger to April 24, 2020

By February 21st, 2020 AT 3:05 PM
Highlights
  • The Department of Telecommunications (DoT) has put the deal on hold due to ongoing tax dispute with UK’s Vodafone Group
  • It is a huge setback for Vodafone Idea which is struggling to pay its AGR dues
  • Vodafone Idea planned to raise Rs 4,500 crore from sale of their stake in the entity

Telecom infrastructure provider Bharti Infratel is set to extend its deadline for closing the merger deal with Indus Towers for the third time, this time to April 24, 2020, pending approval from the Department of Telecommunications (DoT). The companies are still awaiting requisite Foreign Direct Investment (FDI) approval for the deal from DoT according to insiders who talked to ET Telecom. The telecom department is withholding the deal due to the unresolved Rs 22,000 crore tax dispute between UK’s Vodafone Group and India. The deal was first signed on April 23 last year, and was expected to conclude by October 24. However, the companies choose to extend the deal by two months to December 24 and another two to February 24, after failing to get the necessary approval.

Bharti Infratel to Take a Final Call on February 24

“The Bharti Infratel leadership is likely to meet on February 24 to take a final call on extending the long stop date by another two months as FDI approval from the government for the proposed merger is still pending,” a person told ET Telecom.

This is a huge setback for Vodafone Idea which is already in financial troubles due to the ongoing AGR issue. The company was banking on this deal to pull through roughly Rs 4,500 crore from sale of its stake in the entity, which could be used to pay part of its AGR dues.

“A delayed Bharti Infratel-Indus merger will only make it tougher for Vodafone Idea to raise the cash to pay its AGR dues, and further reduce its survival possibilities,” said Rajiv Sharma, research head at SBICap Securities, said to the publication.

He added that the deal is unlikely to be cancelled as the companies would instead prefer to extend the deadline and await DoT approval. The merger is beneficial for both Bharti Infratel and Indus Towers to monetise their telecom infrastructure.

Vodafone Idea Claims Lower AGR Dues of Rs 23,000 Crore

Vodafone Idea owes the government a whopping amount of Rs 56,709 crore as per DoT estimates of which it has only paid 3,500 crore. The telco, however, has disputed this figure and put its AGR dues at Rs 23,000 crore. Of all the telecom operators, only Reliance Jio managed to clear its AGR dues of Rs 191 crore, whereas Bharti Airtel paid Rs 10,000 crore to DoT last week. The government is not providing any relief to Vodafone Idea in the AGR issue and the DoT is now calculating the dues based on each circle basis.

Chakri is a go-to guy for your next smartphone recommendation. Back in his engineering days, he used to play with smartphones by installing custom ROMs and that passion got him into the tech industry. He still goes nuts about a smartphone knocking his door for review. Currently managing everything at Telecom Talk, Chakri is trying to master PUBG Mobile in his free time.

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