Published: Wed, November 15, 2017
Research | By Jennifer Evans

Idea, Vodafone India to sell tower business to ATC Telecom Infrastructure

Idea, Vodafone India to sell tower business to ATC Telecom Infrastructure

As part of the deal with ATC, Idea will sell its entire holding in Idea Cellular Infrastructure Services (ICISL), while Vodafone will divest its business undertaking to ATC Infra. Ltd for about $1.2 billion.

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.

"Both Vodafone India and Idea as customers, and ATC TIPL as a mobile network infrastructure provider, have agreed to treat each other as long-term preferred partners, subject to existing arrangements".

Currently, Vodafone India and Idea Cellular are ranked number two and three, respectively, in India and after the merger, it aims to take on India's largest telecom operator - Bharti Airtel. "The parties will work together to further the expansion of high speed mobile networks in India", it added. And also counter the bruising price war triggered by Mukesh Ambani-owned Reliance Jio Infocomm. The launch of services by Reliance Jio in September past year has spurred a wave of consolidation in the Indian telecom industry. It will have nearly 400 million customers with 35% customer and 41% revenue market share. The merger, expected to be completed in 2018, is awaiting various approvals.

Idea will use proceeds from the tower sale to expand 4G coverage as well, Himanshu Kapania, the carrier's managing director, said by phone Monday.

Under this merger, Vodafone India will get an implied enterprise value of Rs. 82,800 crores and Idea Rs. 72,200 crores.

The company's in its filing with the stock exchange said that the Vodafone and Idea Cellular Limited separately agreed to sell their tower businesses to ATC for an aggregate sum of Rs 7,850 crore. In 2014-15, ICIS reported total income of Rs238 crore, according to filings with the Registrar of Companies. Vodafone and Idea have stake in Indus Towers also, but that may be acquired by Bharti Infratel, which in turn is in talks with private equity players for stake sale.

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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