Vodafone India and Idea Cellular will have to get no-objection nod from the telecom department and the National Company Law Tribunal (NCLT) for selling stake in their respective tower businesses as the deal involves cash inflows into their balance sheets, official sources said.
Both Vodafone and Idea are already in the midst of a merger agreement and their decision to undertake third party sale of their respective tower businesses will need vetting by DoT and NCLT.
Sources said both the companies may have expressed their intent to go for this exercise earlier, but now that this has taken place, the DoT will need to record this financial transaction and approve it. The companies will also have to place this deal before the NCLT. In fact, DoT will also wait for the NCLT response before giving its views, sources added.
If the deal is closed within the time period given by the companies, the closure will also need DoT approval but NCLT's permission at that stage would not be required. Any fresh or actual development during the time period of a merger would mandatorily need a new set of nods, they added.
Vodafone India and Idea Cellular on Sunday said that they had separately agreed to sell their respective standalone tower businesses in India to American Telecom Company Infrastructure Private Ltd (ATC TIPL) for an aggregate enterprise value of Rs 7,850 crore, or $1.2 billion. Both telcos are currently in the middle of their proposed merger, which is expected to be completed in 2018. The merger is currently awaiting approval from NCLT.
Idea Cellular has already approached for NCLT for its merger with Vodafone and both the companies have got conditional nod from market regulator Sebi and approval from exchanges–BSE and NSE. Recently Idea shareholders also approved the merger with Vodafone.
The companies have said in the event that the completion of the sale of the standalone tower businesses precedes the completion of the proposed merger of Vodafone India and Idea, Vodafone India will receive Rs 3,850 crore, or $592 million, and Idea will receive Rs 4,000 crore ($615 million).