Telecoms tower. Picture: BLOOMBERG/SUSANA GONZALEZ
Telecoms tower. Picture: BLOOMBERG/SUSANA GONZALEZ

Bengaluru/Mumbai — India’s Bharti Infratel has agreed to merge with Indus Towers, in a deal that creates the world’s No 2 telecom tower company with an estimated equity value of $14.6bn.

Seeking to capitalise on rapid growth in smartphone usage, the transaction, which values Indus Towers at $10bn, will create an infrastructure giant with more than 163,000 towers, lagging only China Tower.

Top Indian telecoms carrier Bharti Airtel, the majority owner of Bharti Infratel, would be the biggest shareholder in the combined company followed by Vodafone Group, the companies said on Wednesday.

Indus’s two other main shareholders, Idea Cellular and Providence Equity Partners, will have an option to cash out.

Bharti Airtel said separately it would sound out potential investors with a view to selling stakes in the combined entity.

The deal comes amid a vicious price war in the world’s second-biggest market by mobile phone users that has helped spur a rush of mergers and acquisitions activity, including a planned merger of Vodafone’s Indian unit and Idea that threatens Bharti Airtel’s position as India’s biggest phone carrier.

Vodafone and Idea had flagged they would look at selling their stakes in Indus and other tower assets they separately own to help cut debt for the merged telecoms carrier.

The deal comes a day after Bharti Airtel reported its smallest quarterly profit in 15 years.

"With what is happening in the sector you should expect more consolidation, not only among carriers but also within the telecom infrastructure sector," said Jagannadham Thunuguntla, head of research at Centrum Broking in Mumbai.

Bharti Airtel shares closed 3.4% higher on Wednesday after the deal announcement. Bharti Infratel shares fell 1.1 percent.