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Vodafone Group Idea Cellular to Sell India Standalone Towers Businesses in INR 78.5bn Deal
Tuesday 14 November 2017

14 November 2017 - UK-based telecommunications company Vodafone Group Plc's (LON: VOD) (NASDAQ: VOD) Vodafone India unit and India-based Idea Cellular (NSE: IDEA) have separately agreed to sell their respective standalone tower businesses in India to Indian telecommunications infrastructure firm ATC Telecom Infrastructure Private Ltd. business for an aggregate enterprise value of INR 78.5bn (USD 1.2bn), the companies said.

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 penalties.

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 INR 38.5bn (USD 592m) and Idea will receive INR 40bn (USD 615m).

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 completion.

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.
 
Vodafone Group has mobile operations in 26 countries, partners with mobile networks in 48 more, and fixed broadband operations in 19 markets. Vodafone India's standalone tower businesses are operated by Vodafone Mobile Services Ltd. and Vodafone India Ltd.

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 INR5,823m and INR3,698m respectively.
 
Idea Cellular is India's 3rd largest wireless operator, with nearly 200m subscribers. With traffic in excess of 2.7bn 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 and the Bombay Stock Exchange in India.

Idea Cellular is part of the Aditya Birla Group. The Aditya Birla Group is a USD41 bn conglomerate with operations in more than 36 countries. The Aditya Birla Group has been operating in India and globally for over five decades.

Its businesses range among others, mobile telecommunications, metals and mining, cement, carbon black, textiles, garments, chemicals, fertilisers, life insurance and financial services industries.

ICISL is a 100% subsidiary of Idea Cellular Ltd. 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 INR 5,965m and INR 1,939m respectively.
Details
Date Published: 14/11/2017
Target: Standalone tower businesses of Vodafone India and Idea
Country: India
Deal Size: 1.2bn (USD)
Sector: Telecommunications
Type: Divestment
Financing: Cash
Status: Agreed
Vendor: Vodafone India, Idea Cellular
Buyer: ATC Telecom Infrastructure
Comment:
Terms of the deal were not disclosed

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