Bharti Infratel and Indus Towers Ltd are to merge. Bharti Infratel has a 42 pc stake in Indus Towers. Indus had very modest issued share capital of less than Rs 12 lakh when it pledged assets and raised loans and financial assistance to the tune of Rs 9,450 crore. This happened in 2013 and Indus at that time had 34,580 towers in 16 states. The loan helped rollouts and it has now grown to a network of 123,639 towers. The shareholders have valued Indus Towers at Rs 71,500 crore.

On the other hand, Bharti Infratel has a tower network of 39,523. Thus, the combined entity will have over 163,000 towers and 367,000 tenancies across 22 telecom circles. The merger ratio has been fixed at 1,565 shares of Bharti Infratel for every 1 Indus Towers share. Bharti Infratel is a listed company. It is 53.5 pc owned by Bharti Airtel, while the balance 46.5 pc is held by public. The merged company will be known as Indus Towers Ltd and it will continue to be listed.

Based on the merger ratio, the other major shareholder of Indus, Vodafone, will be issued with 783.28 mn new shares in the merged entity, in exchange for its 42 pc shareholding. P5 Asia Holding has the option to receive cash or shares for 3.35 per cent of its 4.85 per cent shareholding in Indus Towers, with the balance exchanged for shares. The Idea group has the option to either sell its 11.15 pc shareholding in Indus Towers for cash based on a valuation formula linked to Bharti Infratel shares or it can receive new shares based on the merger ratio. Both Bharti and Vodafone have management rights in the combined company.

While it makes gains on consolidation, Bharti is equally helped by DoT’s overlooking of various violations pertaining to BWA company acquisitions. The core issue is the licence fee to be paid for migrating BWA spectrum with ISP-A licence to UASL licence. The acquired companies in question are as follows: Qualcomm, Tikona, and Augere. The amount that DoT is forgoing and gifting to Bharti is to the tune of Rs 671 crore. Besides these financial favours, DoT provided many other illegal regulatory favours in the case of award of license to Qualcomm and merger of Augere as ISP with Bharti Airtel as UASL.