India’s PE-backed Bharti, Indus to merge
Indus Towers, an Indian telecom tower network backed by Providence Equity Partners, will merge with domestic rival Bharti Infratel, whose investors include KKR and the Canada Pension Plan Investment Board (CPPIB).
The combined stock and cash deal will value the merged company at INR965 billion ($14.6 billion), according to a filing. Providence will have the option to receive cash or shares in Bharti Infratel for a 3.35% stake in Indus, while another 1.5% interest will be exchanged for shares. Along with other Indus shareholders, Providence will be issued 1,565 shares of Bharti Infratel for each Indus Towers share. This values Indus at INR715 billion.
Bharti Infratel already holds a 42% stake in Indus Towers. Another 42% is held by Vodafone, with the balance held by Idea Group and Providence. Following the merger, the resulting company will remain listed on India’s stock exchanges under the Indus Towers name. Providence will hold at least a 1.1% stake in the new entity, which will be the largest telecom tower company in the world outside of China by number of towers.
Currently Bharti Infratel owns 39,000 towers with 88,000 tenancies, while Indus Towers has 123,000 towers with 278,000 tenancies. For the year ended March 2018 Bharti reported INR66 billion in revenue, up from INR61 billion the year before. Over the same period, net profit fell from INR27 billion to INR24 billion. Indus reported INR187 billion in revenue for the latest financial year; its net profit has not been disclosed, but EBITDA for the period came to INR77 billion.
Bharti Infratel is the cell tower arm of telecom services provider Bharti Airtel, which operates in 17 countries across Asia and Africa. KKR and CPPIB acquired a 10.3% stake in the company last year for INR62 billion. The deal marked KKR’s return as an investor to Bharti Infratel: the firm acquired a 2.6% stake in the company in 2008, which it exited by 2015.
Providence announced last year it would scale back its India business, citing significant investment opportunities in the US and Europe. In addition to Indus, the firm’s remaining India portfolio includes broadband service provider Hathway Cable & Datacom, home shopping channel ShopCJ and digital cinema distribution platform UFO Moviez India.
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