The long delayed merger of Bharti Infratel and Indus Towers is finally going ahead with the board of the Bharti Airtel arm clearing the amalgamation. The deal will see Vodafone Idea selling its entire 11.15 per cent shareholding in Indus Towers for Rs 4,000 crore.

Separately Vodafone Group Plc (Vodafone) also announced that it has agreed with Bharti Airtel and Vodafone Idea Ltd (Vodafone Idea) to proceed with the merger.

The timely completion of the transaction is crucial for Vodafone Idea as it would allow the telco to offload stake and raise funds, which could be used to pay a portion of its adjusted gross revenue dues.

In a regulatory filing to the bourses, Bharti Infratel said that at a meeting on August 31, its board took note of the scheme of arrangement between the two tower companies and the related agreements.

Incorporated in November 2007, Indus Towers is a joint venture among the entities of Bharti Group, Vodafone Group and Vodafone Idea. The private equity firm Providence Equity Partners (Providence) also holds less than 5 per cent in the company.

Bharti Airtel holds 33.57 per cent in Bharti Infratel, while its subsidiary Nettle Infrastructure has a stake of 19.94 per cent with the rest being held by the public.

“After deliberations the board has decided to authorise the chairman to proceed with the scheme and to comply with other procedural requirements for completion of the merger, including approaching National Company Law Tribunal to make the scheme effective,’’ Bharti Infratel said.

A statement from Vodafone Plc said it is likely to be issued 76 crore new shares in the combined company in exchange for its 42 per cent shareholding in Indus Towers.

Providence has also elected to receive shares in the combined company in respect of its 4.85 per cent shareholding in Indus Towers, while Vodafone Idea has decided to sell its entire 11.15 per cent shareholding in Indus Towers for cash.

Vodafone said it will hold close to 28.2 per cent in the combined entity while Bharti Airtel’s shareholding in Bharti Infratel would be diluted from 53.5 per cent to 36.7 per cent.

“Bharti Airtel and Vodafone will jointly control the combined company. At the current market valuation of Bharti Infratel, Vodafone's stake in the combined company would have a value of approximately Rs 15,100 crore (euro 1.7 billion) and Vodafone Idea would receive approximately Rs 4,000 crore (euro 464 million) in cash upon completion,’’ it added.

Vodafone said the final number of shares issued to it and Providence, and the cash paid to Vodafone Idea, will be based on agreed closing adjustments. It further said that the parties have agreed to a security package for the benefit of the combined company.