Bharti Airtel said on Friday it has agreed to buy a 4.7% stake in telecom infrastructure firm Indus Towers from Vodafone Plc for cash, the company said in a statement. The money paid will be used by Vodafone to clear Vodafone Idea’s pending dues to Indus Towers itself, per the terms of the deal, the statement said. Bharti Airtel did not disclose the price of the transaction.
Under the agreement, the amount paid by Bharti Airtel will be “inducted by Vodafone as fresh equity in Vodafone Idea Limited (VIL) and simultaneously remitted to Indus Towers to clear VIL’s outstanding dues,” the company said. Bharti Airtel currently holds 41.73% stake in Indus Towers; it would hold more than 46% stake after the completion of the transaction, making it the largest shareholder. Vodafone Plc currently holds 28.12% stake in Indus Towers.
“We believe this transaction allows Airtel to secure continued strong provision of services from Indus Towers, protects and enhances Airtel’s value in Indus Towers, enables it to receive rich dividends and as also paves the way for subsequent financial consolidation of Indus Towers in Airtel,” the company said.
The company did not disclose the price of the transaction but added that it would be at an “attractive price”. The sale to Bharti could fetch Vodafone around Rs 2,885-2,936 crore, according to an earlier Financial Express report. Airtel would buy 4.7% stake or 127.1 million shares in Indus Towers.
“The said acquisition purchase would be at an attractive price representing a significant discount typically available for such large block transactions. In addition, Airtel is also protected with a capped price which is lower than the price for the block of Indus shares sold by Vodafone on February 24, 2022,” the telecom giant said in the statement.
Earlier this week, Vodafone Plc had announced that it plans to sell 7.1% stake in Indus Towers in order to support the balance sheet of its Indian subsidiary Vodafone Idea Limited (VIL). The company had said at that time it is in talks to sell 4.7% stake to one of the largest shareholders in Indus and would sell the remaining 2.4% stake via block deal.
So far, VIL has not been able to raise funds via external sources. Vodafone Plc owns roughly 44% stake in VIL while Aditya Birla Group holds about 27% of the company.
Earlier this year, Vodafone Idea opted for the government’s offer for payment of interest on its spectrum and adjusted gross revenue (AGR) dues by converting the interest on dues to government equity. This will provide the company with cash flow relief, but analysts say it still needs to raise funds to meet the regular licence fee and spectrum charges, and enhance capex for better 4G coverage.
Indus Towers claims to be one of the largest telecom tower companies in the world and provides coverage in all 22 telecom circles in India. Telecom tower companies lease out space in their sites to wireless operators and thus owning a substantial stake in a telecom tower company could reduce costs.
