Vodafone India and Idea Cellular have reportedly started integrating their networks, believing that they both will receive approvals from all the regulators. Vodafone's tower business will reportedly be valued at $650-700 million, while Idea Cellular's tower business will cost $500-550 million, cites a new report from ET. Idea Cellular and Vodafone India combinedly have close to 20,000 towers as of now.
It is reported that Boston-based American Tower Corp. (ATC), Canadian alternative asset management fund Brookfield and local infrastructure fund IDFC Project Equity Infra have each submitted bids in the $1.1-1.2 billion range for the towers. The bidding result will be revealed in coming days.
"The bids for Vodafone India’s 10,926 stand alone towers have been submitted to Morgan Stanley, while those for Idea’s 8,886-odd stand alone ones have been submitted to Bank of America-Merrill Lynch," said a source to the publication.
Further, there are 15,418 tenants on Idea's 8,886 towers at a tenancy ratio of 1.7, while there were 15,846 tenants on Vodafone's 10,926 towers with a tenancy ratio of 1.5. This was reported in an investor presentation by Idea back in March when the operators announced the merger.
Currently, Morgan Stanley and Bank of America-Merrill Lynch are managing the captive tower sales for Vodafone and Idea respectively. The report also cites that a final decision on the sale of towers will likely take place in a few weeks, and it is expected to be a Vodafone-Idea joint decision.
"Any decision to sell the towers separately or collectively will hinge on whichever format commands a higher enterprise valuation as both Vodafone India and Idea will try to secure the best monetisation deal for their stand alone towers in the run-up to the integration of their networks," said another person to the publication.
Lastly, both Vodafone and Idea are looking to demand a premium amount. The proposed merger has recently received the nod from the Competition Commission of India (CCI). If the proposed merger receives all the approvals from regulators, then the combined entity of Vodafone and Idea will become the largest telecom operator in India with an excess of 400 million subscribers and close to 50% market share. The merger is likely to finish by the end of 2018.