Saturday, 18 November, 2017

Board of Ideal Cellular approves sale of tower business held by subsidiary

Idea Q2 vs Q1 Idea Q2 vs Q1
Juana Turner | 14 November, 2017, 00:44

Bharti Infratel, which was earlier touted as one of the potential buyers for Idea and Vodafone towers, recently brought on board private equity investors KKR and CPPIB. Further, SG&A associated with the assets is expected to be less than Rs 1 billion (approximately $10 million) for the first year.

"We expect the addition of these two high quality portfolios to be highly complementary to our existing assets and to contribute to long-term leasing growth as India's leading mobile operators accelerate their 4G network deployments", said Jim Taiclet, ATC's CEO.

The deal also comes as Idea seeks to pay down debt as it prepares to merge with Vodafone India to surpass Bharti Airtel Ltd.as the country's largest phone operator by subscribers.

India, the world's No.2 mobile phone market, has been rattled by the aggressive pricing of Jio, the telecoms arm of billionaire Mukesh Ambani-controlled Reliance Industries. Vodafone India will receive Rs. 38.5 billion and Idea will get Rs. 40 billion from the transaction. It will have nearly 400 million customers with 35% customer and 41% revenue market share. Its offers of free voice calls and data plans, which continued for months, eroded the revenue and profits of competitors such as Idea and Bharti.

Vodafone will net $592m from the deal with Indian partner Idea Cellular receiving $615m.

Idea and Vodafone India have a total of about 20,000 towers, with 1.65 tenants each on average, as of 30 June 2017. The deal is expected to close in 2018. Kumarmangalam Birla will be the Chairman of merged Vodafone-Idea entity and both the companies will have equal stakes in the merged entity over a period of time.

The deal, which now awaits various regulatory approvals, is expected to be completed next year around March.

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