The telecom giant Bharti Airtel has announced on Friday that it will buy Vodafone’s 4.7% stake in Indus Towers by paying around Rs 2,388 crore. Earlier on February 25, Airtel informed that it had agreed to buy a 4.7% stake in Indus Towers from Vodafone Group Plc in cash. According to the terms of the deal, the UK based telecom had to invest the proceeds into the Vodafone Idea. This investment was meant to clear the payment arrears to the telecom tower company.
The Purchase Agreement
Airtel has released a statement in which it has referred to the agreement with certain affiliates of Vodafone Group Plc (including Euro Pacific Securities Ltd.), the Company and Nettle dated February 25, 2022. It further states that the transaction shall take place at Rs 187.88 per share according to the agreed price formula in the agreement which aggregates to Rs 23,880.62 million. The transaction should take place upon fulfilment of all conditions precedents as agreed by the parties under the agreement. It is to be noted that Indus Towers’ shares closed 4.9% lower at Rs 203.25 on the BSE on Friday.
Airtel in its agreement dated February 25 had stated that any such acquisition shall only be done when such proceeds are confirmed to be utilised by Vodafone to infuse as fresh equity into VIL. This includes any regulatory or shareholders’ approval being fully obtained. Airtel back then had a 41.7% stake in the tower company, however, had not revealed any information regarding the financial terms but did state that the purchase would be at an attractive price, representing a significant discount, typically, available for such large block transactions.
For those unaware, Vodafone Idea has been raising funds from external sources as well as promoters to compete with its industry rivals Jio and Airtel. The cash-strapped telco has set the end of March as the deadline for raising new funds. The board of Vodafone Idea earlier this month approved raising Rs 14,500 crore from its primary promoters – UK’s Vodafone Group as well as Aditya Birla Group (ABG) along with other external investors. The telecom operator is all set to raise Rs 4,500 crore which is approximately $600 million through preferential shares issued at Rs 13.30 per share to its promoters as well as related companies. Moreover, the telco has announced raising another Rs 10,000 crore via equity and debt instruments.