MUMBAI: A recent Delhi high court order allowing the merger of Vodafone Essar’s tower assets into Indus Towers will finally clear all legal hurdles for the tower company — a joint venture between India’s top three private mobile operators BhartiAirtel, Vodafone and Idea Cellular originally proposed in 2008.
Indus Towers, the largest domestic tower company with about 1.12 lakh units, is in the process of filing with the Register of Companies (RoC), executives directly involved with the matter told TOI. However, awritten order is yet to come, they said. This clears the decks for a possible initial public offering (IPO) for Indus Towers, which has been talked about for some years now but could not have been possible without getting this merger approved by the court.
Bharti Airtel and Vodafone each hold 42% stake in the mobile tower company while the rest 16% is held by the Aditya Birla-owned Idea Cellular.
An April 18 order gave a goahead to the proposed merger of around 30,000 towers that Vodafone India had housed under Vodafone Infrastructure when it acquired new circles in 2008. Tax authorities had objected to the demerger of these towers from the mobile operator alleging tax avoidance, and thereby opposing its merger with Indus Towers. The other shareholders Bharti Airtel and Idea Cellular had their schemes approved earlier. The court order is not effective yet, said sources close to the matter.
“The demerger of the towers which were owned by the mobile companies and a subsequent merger into Indus Towers has been approved and this property is being filed with the RoC. The timing of the IPO will be decided based on market conditions,” they added.
Bharti Airtel, Vodafone and Idea Cellular declined to comment on the story. One of the executives mentioned earlier said “while the court order is significant, a lot of the towers under Indus are fresh towers as well”.
Indus Towers owns the passive infrastructure of the three telcos which together control 67% of the domestic mobile telephony revenue. Its tenancy ratio is estimated at 1.98 with operations in 15 circles. The delay in formalizing the merger of the Vodafone’s assets into Indus Towers was closely tracked by rival mobile service providers and tower operators, as the consolidation carries implications for smaller telecom infra firms struggling in a debt-laden industry with falling revenues and rising energy costs.
India’s more than 4-lakh strong telecom tower industry is heavily fragmented in chasing new revenues emanating outside the top three mobile telephone companies. Last year’s apex court order cancelling 122 mobile licences and the subsequent shutting of operations by the likes of Etisalat and STel heavily impacted the towers firms along with the slow roll-out of 3G and 4G which was to prop up revenues for this sector.
Anil Ambani’s Reliance Infratel, GTL Infrastructure, Viom Networks, American Tower Corporation and TowerVision are the other significant tower operators in the country. India’s top telecom operator Bharti Airtel has an independent tower firm Bharti Infratel, which went public last year raising $800 million from the capital market.