Bharti Airtel purchasing an additional stake in Indus Towers is a good thing for the company in the long term. Indus Towers is driving the infrastructure growth in the telecom sector, and the demand for its services will grow further as the 5G market matures in the country. Bharti Airtel recently announced that it would be purchasing an additional 4.7% stake in Indus Towers at a discounted rate from the Vodafone Group UK. The telco had placed a condition that Vodafone would use the proceeds from the equity sale for clearing dues of Vodafone Idea (Vi) with Indus Towers and infuse the rest of the amount as fresh equity into Vi.
Airtel Already Owns Plenty of Indus Towers
With the move, Airtel is helping itself as well as Vodafone Idea. The telco will get Vi’s dues cleared with Indus Towers, which will be good for the tower company and ultimately good for Airtel as it owns a major chunk of the company.
Further, infusing fresh capital in Vodafone Idea (Vi) would keep the balance of the sector in check. Even Airtel has promoted the idea of 3 private telecom operator market in India. With the additional stake, Airtel would become an even larger owner of the company. Airtel already had close to 42% of Indus Towers. This additional 4.7% would make Airtel’s presence as a promoter even stronger in Indus Towers.
The more money Indus Towers makes with infrastructure development in India, the more money Airtel will also make as an owner.
In addition to that, Airtel is also deleveraging really rapidly before the 5G spectrum auctions, which is again a good thing. The company has generated profits and a ton of free cash flow, which is a very big positive for the investors.
Bharti Airtel’s growth rate should only increase from here as Vi is still struggling in the mobile business while Airtel is coming out with services such as Airtel Black to increase average revenue per user (ARPU).
It would be interesting to see if Airtel would want a controlling stake in Indus Towers in the future as the telco is very close to owning 51% of the tower company.