MUMBAI / NEW DELHI : In a highly anticipated consolidation drive, Idea Cellular Ltd and Vodafone India Ltd agreed to sell their towers business to ATC Telecom Infrastructure, the Indian subsidiary of American Tower Corporation (ATC), for about $1.2 billion (Rs 7,850 crore). The move comes amid operator’s efforts to exit non-core businesses in order to pare debt and stay in the business. As per the deal, Idea Cellular will get Rs 4,000 crore and Vodafone India Rs 3,850 crore, both companies said in a joint statement. It may be recalled that Idea and Vodafone earlier this year had announced their merger resulting in a $23-billion deal, and emerging as the country’s largest telecom firm. The deal is scheduled to be completed by the first half of 2018, subject to approvals.
“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 collapses into single tenancies over a period of two years without the payment of exit penalties,” the statement said. ATC, the Boston-based company in an exchange filing said, the tower sale is expected to generate about Rs 2,100 crore in property revenue and around Rs 800 crore in gross margin during the first full year in ATC’s portfolio. It’s expected to be immediately accretive to adjusted funds low from operations per share.
The combined tenancy ratio for ATC will be lower than the average of Idea Cellular and Vodafone India’s after merger as their separate 6,300 tenacity will become common two years, the statement said.
Meanwhile, Idea Cellular registered a more than expected net loss for the second quarter ended September 2017 at Rs 1,106.6 crore; its revenue fell 8.6 per cent to Rs 7,465.6 crore.
“The September quarter was a weak quarter. The debt levels remain to be steady as the operating income is declining. The voice and data rates continued to fall during the period. The impact of low interconnection usage charges can be seen in the next few quarters as well,” said Himanshu Kapania, managing director, Idea Cellular.