Idea Cellular posts bigger-than-expected Q2 loss; shares plummet almost 3%

Idea Q2 vs Q1

Idea Q2 vs Q1

"The standalone tower business of Idea and Vodafone India are pan India passive telecommunication infrastructure business, comprising combined portfolio of approximately 20,000 towers with combined tenancy ratio of 1.65x as of 30th June 2017", it said in filing with stock exchanges.

Vodafone India MD Sunil Sood had earlier said the merger of the two companies was on track for completion in 2018.

"The aggregate cash consideration for the transactions is expected to be Rs 78.5 billion, or approximately $1.2 billion at current exchange rates, subject to customary closing adjustments", said the USA based tower company that had earlier acquired Viom Networks, another Indian tower company.

The merged entity will avoid payment of exit penalties as the combined standalone tower businesses will collapse into single tenancies over a two-year period. And also counter the bruising price war triggered by Mukesh Ambani-owned Reliance Jio Infocomm. This constituted 0.8 per cent of Idea Cellular's total revenues and 0.7 per cent of its net worth for the year.

Vodafone will net $592m from the deal with Indian partner Idea Cellular receiving $615m.

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Both the companies have about 20,000 towers in India. By selling the respective tower businesses, Idea Cellular would get Rs 4,000 crore, while Vodafone would get around Rs 3,850 crore, Business Standard reported.

Earlier this year, Vodafone India and Idea Cellular announced their merger in order to become the largest telecom player in the country.

Idea will sell its entire stake in ICISL and Vodafone India will sell a business undertaking to ATC TIPL. Accordingly, private equity funds KKR and Canadian Pension Plan Investment Board (CPPIB) had emerged as the top contenders.

The agreement is expected to be completed during the first half of 2018.

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