Airtel shares rally 5% as teleco aims to create world’s largest tower firm outside China; 8 key details

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Updated: April 25, 2018 11:05:30 AM

Bharti Airtel share price today: Shares of India's largest telecom company Bharti Airtel rallied more than 4% on Wednesday after the telecom giant planned to create world's largest mobile tower company outside China.

Following the development, shares of Bharti Airtel jumped as high as 5.15% to a day’s top of Rs 427 on BSE on Wednesday. (Image: Reuters)

Bharti Airtel share price today: Shares of India’s largest telecom company Bharti Airtel rallied more than 4% on Wednesday after the telecom giant planned to create world’s largest mobile tower company outside China. Bharti Airtel share price BSE and NSE extended gains on Wednesday after opening higher at Rs 414 on BSE and Rs 414.45 on NSE. Earlier yesterday, Bharti Airtel reported better-than-expected results for the quarter ended 31 March 2018 beating the street estimates but posted the lowest consolidated net profit in last 15 years. Also, Bharti Airtel in its earnings release declared a final dividend of Rs 2.5 per equity share of face value of Rs 5.

“Bharti Airtel Ltd (NSE:BHARTI) (“Bharti Airtel”), Idea Cellular Ltd (NSE:IDEA) (along with its subsidiary ABTL, “Idea Group”) and Vodafone Group Plc (LSE:VOD) (“Vodafone”) today announce that they have agreed to merge Vodafone’s, Idea Group’s and Providence Equity Partners’ (“Providence”) respective shareholdings in Indus Towers Ltd (“Indus Towers”) into Bharti Infratel Ltd (NSE:INFRATEL) (“Bharti Infratel”), creating a combined company that will own 100% of Indus Towers (the “Transaction”),” Bharti Airtel said in a statement.

Following the development, shares of Bharti Airtel jumped as high as 5.15% to a day’s top of Rs 427 on BSE while the stock advanced 5.2% to a day’s high of Rs 427.4 on NSE. “The combination of Bharti Infratel and Indus Towers by way of merger will create a pan-India tower company, with over 163,000 towers, operating across all 22 telecom service areas in India.The combined company will be the largest tower company in the world outside China in terms of the number of towers,’ Bharti Airtel added.

“The merger ratio (1,565 shares of Bharti Infratel for every 1 Indus Towers share, the “Merger Ratio”) is within the range recommended by the independent valuer. The transaction values Indus Towers at an enterprise value of Rs 715 billion (US$10.8 billion) or 9.3x EV/LTM EBITDA,” Bharti Airtel said further.

Details of the deal

  1. Idea Group has the option to either to sell its 11.15% shareholding in Indus Towers for cash-based on a valuation formula linked to the VWAP (Volume-Weighted Average Price) for Bharti Infratel’s shares during the 60 trading days prior to completion of the merger or receive new shares in the combined company based on the merger ratio.
  2. Providence has the option to elect to receive cash or shares for 3.35% of its 4.85% shareholding in Indus Towers, with the balance exchanged for shares.
  3. Vodafone will be issued with 783.1 million new shares in the combined company, in exchange for its 42% shareholding in Indus Towers.
  4. The combined company, which will fully own the respective businesses of Bharti Infratel and Indus Towers will change its name to Indus Towers Limited and will continue to be listed on the Indian Stock Exchanges.
  5. Bharti Airtel and Vodafone will jointly control the combined company, in accordance with the terms of a new shareholders’ agreement. Pro forma for the Transaction, the combined company’s equity value would be Rs 965 billion (US$14.6bn).
  6. The transaction is subject on regulatory and other approvals, including from CCI, SEBI, NCLT, DoT (FDI approval), Bharti Infratel’s shareholders, necessary corporate approvals from the companies involved, as well as closing conditions and is expected to close before the end of the financial year ending 31 March 2019.
  7. At present, Indus Towers is jointly owned by Bharti Infratel (42%), Vodafone (42%), Idea Group (11.15%) and Providence (4.85%).
  8. In the deal, JP Morgan is the Fairness opinion provider for Bharti Infratel and AZB & Partners is the legal advisor as the major advisors to Bharti Airtel and Bharti Infratel. DSP Merrill Lynch Ltd is the financial advisor and Bharucha & Partners is the legal advisor to Idea Group. Morgan Stanley is the financial advisor and S&R Associates, Slaughter and May are the legal advisors to Vodafone while Walker Chandiok & Co LLP is the Independent Valuer.

 

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