Idea gets nod to hive off tower business

Idea Cellular has received the shareholders’ approval for hiving off its towers into a subsidiary — Idea Cellular Towers Infrastructure. This subsidiary will have Idea’s nearly 11,000 towers in nine circles and will merge with Indus Towers, the three-way joint venture between Bharti Airtel, Vodafone Essar and Idea.

The hive-off was first proposed by the company board in July 2007 and had to be approved by shareholders and creditors.

Idea informed the BSE on Thursday that various approvals had been received for the demerger of passive infrastructure. The Idea Cellular stock closed at Rs 69.50 on BSE on Thursday, marginally up from the previous close.

Idea holds a 16% stake in Indus, while the other two JV partners have a 42% holding each. With the approval for the hive-off, this stake will be held through the new tower company. Increasingly, Idea is opting for shared towers instead of owned towers to convert capex into opex. As a result, it will lower the operating margins going forward.