Indian firms gain first of required approvals for deal that will create world’s biggest towers company outside China

The Competition Commission of India (CCI) has given the green light to Bharti Infratel’s proposed merger with Indus Towers.

The go-ahead from the CCI, which was announced by Bharti Infratel on Monday, is the first in a series of approvals required by the Indian towers tie-up. When the firms detailed their plan to merge in April they indicated that the deal would also need the thumbs-up from the Department of Telecommunications (DoT) and the Securities and Exchange Board of India (SEBI), amongst others, but said they expected it to close by the end of March 2019.

The merger will create a pan-Indian towers company with a portfolio of 163,000 towers, making it the largest in the world, outside China, the companies claim. The combined entity will have an equity value of 965 billion rupees or US$14.6 billion, they said in April.

As it stands, Indus Towers is a joint venture between Bharti Infratel, Vodafone, and Idea Cellular. Bharti and Vodafone each hold a 42% stake, while Idea has 16% through its Aditya Birla Telecom Ltd (ABTL) subsidiary; that 16% is split between Idea with 11.15% and Providence Equity Partners 4.85%. Bharti Infratel itself is controlled by Bharti Airtel.

Under the terms of the deal, Bharti Airtel and Vodafone will have equal rights in the new entity and have signed a shareholder agreement to that effect. The deal makes provision for Idea and Providence to sell their shares in the company.

Vodafone and Idea Cellular are in the process of merging their Indian mobile operations to create a new market leader. They brokered separate deals to sell their standalone towers businesses – outside of Indus Towers – to American Towers and completed those deals recently. However, their $23 billion merger, agreed well over a year ago, has yet to close.