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Bharti Infratel on Monday extended the deadline for its merger with Indus Towers by two more months to April 24 but cautioned that final call on scheme implementation will be taken by the board based on assessment of the ongoing AGR-crisis and its impact on customers. The delay in completion of the deal would come as a blow to Vodafone Idea which has to cough up Rs 53,000 crore in statutory dues to the government and was eyeing about Rs 5,500 crore from stake sale in Indus Towers.
Vodafone Idea Ltd (VIL) has so far paid Rs 3,500 crore towards statutory dues, and any monetisation exercise would allow it to get closer to at least the principle AGR amount it owes to the government. VIL has said it retains the right to monetise its 11.15 per cent equity stake in Indus for cash.
"The final decision to implement the scheme will be taken by the board keeping in mind the best interest of the company and its stakeholders including the assessment of the current crisis facing the telecom industry and the extent of its impact on the company's major customers," Bharti Infratel said in a regulatory filing.
It said that although the foreign direct investment (FDI) approval for the merger with Indus Towers had been received, the long stop date (deadline) has been extended as other actions and conditions precedent to be fulfilled for the scheme to become effective cannot be completed by the previously stated deadline of February 24.
"...The board of directors has further extended long stop date till April 24, 2020, subject to agreement on closing adjustment and other conditions precedent for closing, with each party retaining the right to terminate and withdraw the scheme," it said.
The company will have to seek approval of the National Company Law Tribunal, Chandigarh, and Registrar of Companies now, sources said.
The delay would come as a setback especially to Vodafone Idea, which has so far paid only seven per cent of statutory dues in two tranches.
In a separate BSE filing, Vodafone Idea said, "...as informed at the time of merger announcement of Bharti lnfratel Limited and Indus, the company has the right to monetise its 11.15 per cent equity stake in Indus for cash".
Bharti Infratel and Vodafone hold 42 per cent stake each in Indus. Vodafone Idea holds 11.15 per cent stake in the mobile tower firm.
Bharti Infratel had last week said that its board of directors will meet on February 24 to "take stock and decide the future course of action", following the FDI approval that came in from the telecom department.
It was in April 2018 that Bharti Airtel, Idea Cellular and Vodafone Group had announced an agreement for the merger of Indus Towers and Bharti Infratel to create the largest mobile tower operator in the world, outside China.
Once the merger is completed, the telecom tower juggernaut would have over 1,63,000 towers across 22 telecom service areas in India
As per the original plans, the combined company, which would fully own the respective businesses of Bharti Infratel and Indus Towers, would change its name to Indus Towers Ltd and will continue to be listed on Indian stock exchanges.
The adjusted gross revenue (AGR) overhang on the troubled sector comes from 15 entities owing the government Rs 1.47 lakh crore in unpaid statutory dues -- Rs 92,642 crore in unpaid licence fee and another Rs 55,054 crore in outstanding spectrum usage charges.
These dues arose after the Supreme Court, in October last year, upheld the government's position on including revenue from non-core businesses in calculating the annual AGR of telecom companies, a share of which is paid as licence and spectrum fee to the exchequer.
Of the estimated dues that include interest and penalty for late payments, Airtel and Vodafone Idea owe about 60 per cent.
While Airtel has raised USD 3 billion (roughly Rs 21,000 crore) in the last few months and is expected to have sufficient funds to tide over the AGR woes, Vodafone Idea remains deeply vulnerable.
The government, meanwhile, is looking to strike a balance between complying with the Supreme Court order on AGR dues, ensuring health of the sector and safeguarding consumer interest.
Both Bharti Airtel Chairman Sunil Mittal and Vodafone Idea Chairman Kumar Mangalam Birla continued to meet top government functionaries throughout last week to seek prompt measures that would offer a breather to the sector.
The Supreme Court, earlier this month, rejected a plea by mobile carriers such as Bharti Airtel and Vodafone Idea for extension in the payment schedule and asked companies to deposit their past dues for spectrum and licences.
It threatened to initiate contempt proceedings against top executives of these firms for non-payment.
While Vodafone Idea has so far paid only Rs 3,500 crore, Airtel has paid Rs 10,000 crore out of its estimated liability of over Rs 35,000 crore. Tata Teleservices has paid Rs 2,197 crore, the entire outstanding it believes to have arisen after the October ruling of the apex court for calculating dues.
