India’s second largest telecom company Vodafone India and third largest Idea Cellular, which are in the middle of a proposed merger, have separately agreed to sell their standalone tower business to ATC Telecom Infrastructure Private Ltd for an enterprise value of Rs 78.5 billion (US$ 1.2 billion).

Idea and Vodafone have a pan-Indian telecom tower business comprising 20,000 towers. Following the sale, Vodafone India will receive Rs 38.5 billion (US$ 590 million) and Idea Rs 40 billion (US$ 610 million).

The merger of the two companies is expected to be completed by the first half of next year and is currently awaiting various approvals.

At the time of announcement of merger in March, both companies revealed their intention to sell their individual standalone tower businesses to strengthen the balance sheet of the combined business.

Idea founder Kumarmangalam Birla will be the Chairman of merged Vodafone-Idea entity and both companies will have equal stakes over a period of time.

The entry of Reliance Jio Infocomm, owned by India’s richest man Mukesh Ambani, and its predatory pricing have caused a major disruption in the telecom industry, with players like Uninor and Tatas exiting the market and others going for mergers.

On the other hand, the expansion of 4G networks, availability of cheaper smartphones and surge in data demands have opened up new opportunities for the telecom tower industry.