The Kumar Mangalam Birla led Idea Cellular and Vodafone Plc.'s Indian unit Vodafone India have separately agreed to sell their respective standalone tower businesses in India to ATC Telecom Infrastructure Private Limited (ATC TIPL) for an aggregate enterprise value of ₹7850 crore (US $1.2 billion).

Both companies jointly own about 20,000 towers with tenancy ratio of 1.65x as of June 30, 2017, said a company statement, adding that Vodafone will get ₹3850 crore while Idea Cellular will get its share of ₹4000 crore from the transaction.

Commenting on the deal, Jim Taiclet, CEO American Tower’s said, “We expect the addition of these two high quality portfolios to be highly complementary to our existing assets and to contribute to long-term leasing growth as India’s leading mobile operators accelerate their 4G network deployments.”

Both Vodafone India and Idea as customers, and ATC TIPL as a mobile network infrastructure provider, have agreed to treat each other as long-term preferred partners, subject to existing arrangements. The parties will work together to further the expansion of high speed mobile networks in India, the statement added.

Idea will sell its entire stake in its tower unit Idea Cellular Infrastructure Services Limited (ICISL) to ATC TIPL, while Vodafone India will sell a business undertaking that owns towers to ATC TIPL.

As part of the deal, after completion of Vodafone and Idea merger, about 6,300 co-located tenancies of the two operators on the combined standalone tower businesses will collapse into single tenancies over a period of two years without the payment of exit penalties.

This transaction follows the Vodafone India and Idea merger announcement of 20 March 2017 whereby the parties announced their intention to sell their individual standalone tower businesses to strengthen the balance sheet of the combined business.

The receipt of these proceeds prior to completion was anticipated and provided for in the merger agreement and hence would not affect the agreed terms of the Vodafone India and Idea merger, including the amount of debt which Vodafone will contribute to the combined company at completion, the statement added.

Completion of the transaction is subject to customary closing conditions and receipt of necessary regulatory approvals, and is expected to take place during the first half of calendar year 2018.

Earlier this year, Vodafone India and Idea had agreed to merge their operations to become India's largest mobile operators with over 400 million subscribers, dislodging Bharti Airtel to the second position in the world's second larget telecom market.

Meanwhile, Idea Cellular on Monday reported a net loss of ₹1236 crore for the second quarter of this fiscal due to free voice calls offered by Reliance Jio, disrupting the Indian mobile telephony market.

Idea Cellular shares closed down 3.6% at ₹93.55 in a weak Mumbai market on Monday.