Indus deal - Vodafone Idea and Bharti Airtel - Angel Broking

Mr. Keshav Lahoti, Associate Equity Analyst, Angel Broking Ltd

"Bharti Infratel on Tuesday said that the Board of Directors in its meeting held yesterday i.e. August 31, 2020 decided to authorize the to proceed with the merger with Indus Towers. Vodafone Idea has chosen cash consideration for its 11.15% shareholding in Indus which will be based on 60 days VWAP as at Closing date (and agreed closing adjustments). Based on today's calculation the cash consideration comes to approx. Rs. 4,000 crore.

The shareholding of the merged entity will be Vodafone (28.2%), current Infratel Shareholders (68.6%), PEP (3.2%) and total for Indus share swap (31.4%). It took more than 2 years to finally conclude the long pending merger to create the world's largest mobile tower Company outside China.

We see this merger as a positive for Vodafone Idea and Bharti Infratel. The merger will bring in synergy benefits for both the Company. Vodafone Idea will be able to strengthen its balance sheet post receiving Rs.4000 cr as per terms of the merger for its shareholding. However, the Supreme ruling on AGR allowing 10 years to clear the AGR dues to telecom operators was a negative development for Vodafone Idea and Bharti Infratel as Vodafone Idea will find it difficult to clear its AGR dues over 10 years.

If Vodafone Idea shuts its business in future then it will be adverse development for Bharti Infratel as real profits come in for this business when a tower is shared by at least two telecom operators."

Shares of Vodafone Idea Ltd was last trading in BSE at Rs.9.91 as compared to the previous close of Rs. 8.89. The total number of shares traded during the day was 140138197 in over 110095 trades.

The stock hit an intraday high of Rs. 10.1 and intraday low of 9.25. The net turnover during the day was Rs. 1357391862.

Source : Equity Bulls

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