Bharti Infratel awaits SC verdict on AGR for merger with Indus Towers

New Delhi: Bharti Infratel is claimed to be hesitant about going forward with a plan involving a merger with Indus Towers and a buyout of seven per cent fairness stake from Vodafone Idea within the resultant entity. While virtually all clearances have been obtained, the corporate has sought to increase the method by one other two months.

People with data of the matter stated the reason being uncertainty over the survival of cash-strapped Vodafone Idea, which is dealing with adjusted gross income (AGR) dues of round Rs 57,000 crore, and the modified business state of affairs.

Majority owned by Bharti Airtel, Infratel is awaiting the result of the subsequent listening to within the Supreme Court on the AGR situation on March 17, that may take inventory of funds by telecom operators together with Vodafone Idea. The latter is urgent for the deal to be carried out on the earliest, in order that it may possibly monetise its 7 per cent within the merged entity for Rs 4,500 crore — as per agreed phrases — and repay part of AGR dues, stated the folks cited above.

“The tenancy of the tower business depends upon the survival and viability of Vodafone Idea,” stated a senior official accustomed to the event.

“In case of the worst eventuality, the tenancy will severely decline and that will adversely affect the tower company.” Vodafone Idea and Infratel didn’t reply to ET’s queries. “Since the time the merger was announced, ground realities have changed totally,” stated an business govt.

“Industry is now down to three private players, with one barely surviving. Average sharing factor (for Infratel) is already down to 1.85 from 2.30 as on March 31, 2018… One has to take into account the changed scenario in fresh negotiations before closing the deal.” Bharti Infratel closed 1.1 per cent up at Rs 218.75 on Wednesday. It’s down greater than 33 per cent for the reason that merger announcement.

Bharti Infratel has to submit the telecom division’s (DoT) clearance doc to National Company Law Tribunal (NCLT) Chandigarh. NCLT can then give ultimate approval inside per week or two, since this can be a “formality,” stated one of many individuals cited above. “But Infratel has extended it by two months.”

“Vodafone Idea has already informed the government that the proceeds from monetisation of Indus Towers stake would be used toward payments of AGR dues,” stated an individual concerned in discussions with DoT. “All parties to the merger deal have assured their readiness to do the needful to enable government receipts funds from Vodafone Idea.”

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