Bharti Airtel to merge its tower subsidiary Infratel with Indus Towers for joint holding with Vodafone

Bharti Airtel announced the much-anticipated merger of its tower subsidiary with Indus Towers, a three-way tower venture controlled by Bharti Airtel, Vodafone and Idea Cellular.

Indus Towers is currently jointly owned by Bharti Infratel and Vodafone, who own  42% each, Idea Group (11.15%) and Providence Equity Partners, who hold4.85%.

Bharti Airtel and Vodafone Group will have equal rights in the combined company.

“They have entered into a shareholders’ agreement and it is expected that the combined company’s articles of association will be amended at completion to reflect some of these rights,” Bharti Airtel said.

Following completion, the Board of the combined company will comprise of 11 directors, of whom three will be appointed by each of Bharti Airtel and Vodafone, one will be appointed by KKR/Canada Pension Plan Investment Board and four (including the Chairman) will be independent.

The management team will be confirmed prior to closing, the company added.

The transaction will be structured as follows.

Indus Towers will be merged with and into Bharti Infratel through a scheme of arrangement.

The Merger Ratio will be 1,565 shares of Bharti Infratel for every 1 Indus Towers share, implying an enterprise value for Indus Towers of Rs 715bn (US$10.8bn). This is equivalent to valuing Indus Towers at 9.3x enterprise value to ebitda.

Idea Group will sell its 11.15% shareholding for cash payable by Bharti Infratel, roughly equivalent to Rs 6,500 cr (US$1.0bn).

In lieu of cash, Idea Group can also choose to receive 207.9 m new shares or a 7.1% shareholding in the combined company, if Providence also chooses to receive new shares in exchange for its full 4.85% shareholding in Indus Towers.

All the proceeds from the sale of the 11.15% stake will be for the benefit of the entity resulting from the merger of Vodafone India and Idea Group, rather than for Idea Cellular before the merger.

Providence will receive new shares equivalent to a 1.1% shareholding in the combined company in exchange for 1.5% out of its 4.85% shareholding in Indus Towers.

If Idea opts for getting shares instead of money, then Vodafone Group, together with the merged entity of Vodafone-Idea, will hold a 33.8% stake in Bharti Infratel, equal to the stake held by Bharti Airtel in the company.



Idea Group (all cash election); Providence (1.5% in shares, 3.35% in cash)

Idea Group (all shares election); Providence (all shares election)

Idea Group cash election?



Providence cash election?



Bharti Airtel






Idea Group





Public shareholders



The consideration for the remaining 3.35% of its shareholding in Indus Towers will be settled by Bharti Infratel in cash or shares depending on what Providence wants.

The valuation terms of the cash consideration will be identical to that for Idea Group and the valuation terms for the share consideration will be based on the Merger Ratio.

Vodafone will be issued with 783.1 m new shares in the combined company, in exchange for its 42% shareholding in Indus Towers.

If Providence decides to sell 3.35% of its shareholding in Indus Towers for cash, and (b) Idea Group decides to sell its full 11.15% shareholding in Indus Towers for cash, these shares would be equivalent to a 29.4% shareholding in the combined company.

The Transaction values Vodafone’s shareholding at Rs 28,400 bn (US$4.3bn)

Similarly, if Providence decides to sell 3.35% out of its 4.85% shareholding and Idea Group sells its full 11.15% shareholding in Indus Towers, Bharti Airtel’s shareholding in will be diluted from 53.5% in Bharti Infratel today to 37.2% in the combined company.

Taken together, Bharti Infratel and Indus Towers had over 163,000 towers and 367,000 tenancies as at 31 March 2018.

“With over Rs 25,300 cr in revenues (for the financial year ended 31 March 2018), the combined company will be well placed to invest on a national basis to satisfy the future demand from all telecoms operators in India as they continue to densify their networks to support sustained data traffic growth and roll out new network technologies,” Airtel said.

After completion, the combined company will be accounted for under the equity method by Vodafone and Bharti Airtel.


12 months ending 31 March 2018

INRm (US$m)

Bharti Infratel (excl. its 42% share of Indus Towers)

Indus Towers (100%)

Combined company









Tenancy Ratio









INR66,180m (US$999m)

INR187,424m (US$2,830m)

INR253,604m (US$3,830m)


INR31,854m (US$481m)

INR77,160m (US$1,165m)

INR109,014m (US$1,646m)


INR11,223m (US$169m)

INR24,730m (US$373m)


Net debt / (net cash)