BREAKING NEWS

Vodafone India & Idea to sell its telecom tower assets to ATC for $1.2 billion

  • Vodafone India and Idea Cellular Limited (“Idea”)1 have separately agreed to sell their respective standalone tower businesses in India to ATC Telecom Infrastructure Private Limited (“ATC TIPL”, formerly Viom)2 for an aggregate enterprise value of INR78.5 billion (US$1.2 billion)3.
  • The standalone tower businesses of Vodafone India and Idea are pan-Indian passive telecommunication infrastructure businesses, comprising a combined portfolio of approximately 20,000 towers with a combined tenancy ratio of 1.65x as at 30 June 2017.
  • Idea will sell its entire stake in ICISL and Vodafone India will sell a business undertaking to ATC TIPL.
  • 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.
  • 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 penalties4.
  • This transaction follows the Vodafone India / Idea merger announcement of 20 March 2017 whereby the parties announced their intention to sell their individual standalone tower businesses to strengthen the balance sheet of the combined business.
  • In the event that the completion of the sale of the standalone tower businesses precedes the completion of the proposed merger of Vodafone India and Idea, Vodafone India will receive INR38.5 billion (US$592 million) and Idea will receive INR40.0 billion (US$615 million)5. The receipt of these proceeds prior to completion was anticipated and provided for in the merger agreement and hence would not affect the agreed terms of the Vodafone India and Idea merger, including the amount of debt which Vodafone will contribute to the combined company at completion6.
  • Completion of the transaction is subject to customary closing conditions and receipt of necessary regulatory approvals, and is expected to take place during the first half of calendar year 2018.
1 Vodafone India’s standalone tower businesses are operated by Vodafone Mobile Services Limited and Vodafone India Limited. Idea’s standalone towers business is held via its wholly owned subsidiary Idea Cellular Infrastructure Services Limited (“ICISL”) 
2 A majority owned subsidiary of American Tower Corporation 
3 Based on INR / US$ FX rate of 65.01 as of November 10, 2017
4 Taking into account the impact of the tenancy loss, the proforma adjusted EBITDA for the combined standalone tower businesses would have been INR5.8 billion (US$90 million) based on unaudited FY17 estimated proforma EBITDA for Vodafone India and unaudited H1FY18 annualised proforma EBITDA for Idea standalone tower businesses, adjusted for the anticipated run-rate impact of co-located tenancies to be exited on a staggered basis over two years
5 Subject to customary closing adjustments including debt and cash
6 Vodafone will contribute INR25 billion more net debt than Idea at completion excluding the impact of tower sales, subject to customary closing adjustments

About Vodafone 
Vodafone Group is one of the world’s largest telecommunications companies and provides a range of services including voice, messaging, data and fixed communications. Vodafone Group has mobile operations in 26 countries, partners with mobile networks in 48 more, and fixed broadband operations in 19 markets. As of 30 June 2017, Vodafone Group had 523.5 million mobile customers and 18.5 million fixed broadband customers, including India and all of the customers in Vodafone’s joint ventures and associates. 

About Vodafone India’s standalone tower business 
Vodafone India’s standalone tower businesses are operated by Vodafone Mobile Services Limited and Vodafone India Limited. The business has a portfolio of 10,235 towers with a tenancy ratio of 1.52x (30 June 2017). For FY17, on a proforma unaudited basis, revenues and EBITDA would have been INR5,823 million and INR3,698 million respectively.

About Idea Cellular Limited 
Idea Cellular is India’s 3rd largest wireless operator, with nearly 200 million subscribers. With traffic in excess of 2.7 billion minutes a day, Idea ranks among the Top 6 country operators in the world. With a spectrum portfolio of approximately 900 MHz across 900, 1800, 2100, 2300 and 2500 MHz FDD and TDD bands, Idea has a pan India wireless broadband footprint. Idea is listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) in India.

Idea Cellular is part of the Aditya Birla Group. The Aditya Birla Group is a US$41 billion conglomerate with operations in more than 36 countries. The Aditya Birla Group has been operating in India and globally for over 5 decades. Its businesses range among others, mobile telecommunications, metals and mining, cement, carbon black, textiles, garments, chemicals, fertilizers, life insurance and financial services industries.

About Idea Cellular Infrastructure Services Limited (“ICISL”) 
ICISL is a 100% subsidiary of Idea Cellular Limited. ICISL provides passive infrastructure services on a pan India basis to leading Indian mobile operators. It has a portfolio of 9,900 towers with a tenancy ratio of 1.80x (30 Sep 2017). During H1 FY 18, ICISL had revenues and EBITDA of INR5,965 million and INR1,939 million respectively.

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