Post merger the companies will share almost 400 million customers, with 35% customer and 41% revenue market share.
Telecom giants Vodafone India Ltd and Idea Cellular Ltd have separately agreed to sell their standalone tower businesses. In a joint statement released on Monday, the companies confirmed that they have made a deal with the buyer – ATC Telecom Infrastructure Pvt Ltd – for about $1.2 billion.
The joint statement by the companies further mentioned that their tower businesses – which are pan-Indian passive telecommunication infrastructure businesses – comprises of about 20,000 towers (combined) with a combined tenancy ratio of 1.65x, as recorded till June 30.
“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. The parties will work together to further the expansion of high speed mobile networks in India,” the statement mentioned.
During an exchange filing on Monday, the Idea Cellular said, “The sale of the company’s standalone business will be achieved through the sale of the entire shareholding of ICISL (Idea Cellular Infrastructure Services Ltd) by the company comprising 60,000 equity shares of Rs10 each to the purchaser.”
Furthermore, with an aim to dominate the telecom market – which witnessed major disruptions after Mukesh Ambani new venture, Reliance Jio Infocomm Ltd came up with lucrative plans with free voice calls and low data prices – Idea and Vodafone have agreed on getting merged. However, the merger – which will form the country’s largest telecom company in a $23 billion deal – excludes Vodafone’s 42% stake in Indus Towers ltd.
Being the world’s second largest merger, Idea and Vodafone together will now overtake Bharti Airtel Ltd. Together the companies will share almost 400 million customers, with 35% customer and 41% revenue market share.
Despite having a combined debt of Rs 1.08 trillion, the merger – which is expected to be completed by 2018 – will help Idea and Vodafone have revenue of Rs 81,600 crore and an operating profit of Rs 24,400 crore.
In the joint statement released on Monday, the companies said, “After Vodafone India and Idea have completed their merger, 6,300 co-located tenancies of the two operators on the combined standalone tower businesses will collapse into single tenancies over a period of two years without the payment of exit penalties.”