Bharti Infratel becomes Indus Tower on Friday

Bharti Infratel, the tower company spun out of Bharti Airtel, said it will change its name and ticker to Indus Tower on Friday, Dec 18.

The name and stock ticker will come into effect on India’s major stock exchanges, including the NSE, on that day. The new ticker will be INDUSTOWER.

The merger, originally designed to be completed around two years ago, was designed as a way for Vodafone Idea to reduce its debt by around Rs 6,000 cr.

LONG PATH

Before Vodafone and Idea Cellular merged into one company three years ago, both Vodafone and Airtel had stakes of 42% each in Indus Towers, while Idea had around 11%.

When Vodafone and Idea merged, the owners Idea Cellular agreed to transfer the 11% stake owned by Idea Cellular in Indus to the newly formed company. But, the 42% owned by Vodafone India would be with Vodafone, the UK-based parent, and would not be transferred to Vodafone Idea.

This was done so that the owners of Idea could have a stake in the new merged operator that was comparable to what Vodafone Group would end up with in the merged company.

It was also agreed that Vodafone Idea would subsequently sell the 11% to reduce its debt levels.

Since Bharti Airtel — as an existing Indus shareholder — had a right to buy any such stake, it decided to step in and buy the 11% stake.

Given that Airtel would end up with around 53% stake in Indus Tower, it was also decided to merge Indus with Airtel’s other tower company, Bharti Infratel.

Under the agreements, the value of the 11% stake — and therefore the money that Vodafone Idea would get for it — was tied to Bharti Infratel’s share price.

When the deal was announced almost three years ago, the value of the 11% stake came to around Rs 6,000 cr.

However, because tower company valuations — as well as the share price of Bharti Infratel — have come down since then, Vodafone Idea received only around Rs 3,760 cr for its stake.

Also, given that Bharti Airtel owned stakes in both merging entities — Infratel and Indus, and Vodafone Group owned a stake only in Indus, Bharti Airtel ended up with a higher share of the merged tower company.

In the new, merged tower company, Bharti Airtel owns about 36.7%, while Vodafone Group owns about 28.12%. Vodafone Idea — the Indian operator — will not hold any stake.

Most of the money received by Vodafone Idea from its stake sale will be paid back to Indus Towers as part payment of tower dues.

Both Vodafone Idea and Bharti Infratel shares rose on the news of the completion of the merger a few days ago.