Idea, Vodafone to sell tower business to ATC for $1.2bn

Idea Q2 vs Q1

The companies noted that in the event that the completion of today's sale precedes the completion of the proposed merger, both expected next year, Vodafone India will receive INR38.5 billion ($592 million).

The deal will not affect the merger terms of the two companies.

In Mar'17, Vodafone India and Idea announced a merger to create India's largest mobile operator worth over Rs. 1.5 lakh crore, with 35% market share.

Through a BSE filing on Monday, Idea and Vodafone stated the pan-Indian telecom tower business comprising 20,000 towers with c combined tenanct ratio of 1:1.65 will be sold to ATC, formerly known as Viom. The telcos and the tower company will treat each other as long-term preferred partners, and will work together to speed up the expansion of high-speed mobile networks.

Idea, controlled by billionaire Kumar Mangalam Birla, reported its fourth straight quarterly net loss Monday amid intensifying competition after Reliance Jio Infocomm Ltd. entered the market past year with offers of free voice services.

The deal also comes as Idea seeks to pay down debt as it prepares to merge with Vodafone India to surpass Bharti Airtel Ltd.as the country's largest phone operator by subscribers. The launch of services by Reliance Jio in September a year ago has spurred a wave of consolidation in the Indian telecom industry. The merger is expected to be completed in 2018. The tower business sale is subject to regulatory and other approvals. By selling the respective tower businesses, Idea Cellular would get Rs 4,000 crore, while Vodafone would get around Rs 3,850 crore, Business Standard reported.

In addition to the standalone tower business, Idea also owns 16% stake in Indus Tower Ltd, which is a three-way joint venture between Idea Cellular (through its unit Aditya Birla Telecom Ltd), Bharti Infratel Ltd and Vodafone India. Accordingly, private equity funds KKR and Canadian Pension Plan Investment Board (CPPIB) had emerged as the top contenders.

The standalone businesses of Vodafone and Idea have a combined portfolio of almost 20,000 towers, and the deal is expected to be completed by the first half of 2018.

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