Vodafone Idea to Cash Out Up to Rs 6,000 Crore Following Merger of Indus Tower and Bharti Infratel

In the past four quarters combined, the telecom company has registered losses of Rs 19,734 crores. It is also crucial to note that Vodafone Idea holds 11.15% stake in Indus Towers

Highlights
  • UK’s Vodafone Group Plc owns a 42% stake in Indus Towers
  • post the merger, Vodafone Group Plc will look forward to bringing down its stake to 29.4%

Vodafone Idea’s stake sellout in Indus Towers given its merger with Bharti Infratel has been floating around in the form of headlines in the industry for quite some time now. But, now Vodafone Idea is nearing its big cashout from the tower firm as the days of the merger draw nearer. As per an ET Telecom report, Vodafone Idea, the second-largest telecom operator by subscriber base is close to selling its stake in Indus Towers as the merger of the tower companies is in final stages. According to the sources close to the matter, Vodafone Idea is likely to bag Rs 5,500 to Rs 6,000 crore from this deal.

Vodafone Idea Currently Holding 11.5% Stake in Indus Towers 

One of the persons informing about the matter said, “In the two-stage transaction, Bharti Infratel will first buy out the stakes of Vodafone Idea and Providence Equity Partners.” He further added, “Subsequently, Indus Towers will be merged with Bharti Infratel.” Vodafone India and Idea Cellular merged their operations during the times of bleeding telecom industry and financial troubles last year. As its synergy and capex plans come to fruition, the telecom operator is seeking to raise funds from various sources. The operator is also looking forward to a Rs 25,000 crore rights issue. In the past four quarters combined, the telecom company has registered losses of Rs 19,734 crores. It is also crucial to note that Vodafone Idea holds 11.15% stake in Indus Towers.

UK’s Vodafone Group Plc which owns a 45% stake in the new telco, also owns a 42% stake in Indus Towers. However, post the merger of Indus Towers and Bharti Infratel, Vodafone Group Plc will look forward to bringing down its stake to 29.4% in the new tower entity. For this, the UK based conglomerate is in discussion with private equity firms and financial investors who will help the company in diluting its stake in the tower firm.

Total Transaction of Merger Pegged at Rs 7,000 Crore 

The source aware of the matter remarked about this matter, “In addition, Providence Equity Partners, the private equity firm that owns a 4.85% stake in Indus Towers, will also monetise almost two-thirds of its holding.” The person further stated, “It would have held a 3.1% stake in the merged entity. However, after cashing out partly, it will hold a 1.1% stake.”

It is also worth noting that the total transaction which includes Vodafone Idea’s stake sale in Indus towers and Providence’s part sale is pegged at around Rs 7,000 crore. Bharti Airtel is to fund these transactions through a combination of internal accruals and short term debt.

In its June quarterly report, Vodafone Idea had said that its 11.15% stake in Indus has around a value of Rs 5,630 crore, based on the VWAP (volume-weighted average price) for Bharti Infratel’s shares during the last 60 trading days as at June 30, 2019) which it plans to monetise on completion. On posing with questions, Vodafone Idea, Bharti Infratel and Providence Equity refused to make any comments.

Arpit spends his day closely following the telecom and tech industry. A music connoisseur and a night owl, he also takes a deep interest in the Indian technology start-up scene and spends rest of his time spilling poetry and stories on paper.

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Mani Mahesh Dhiman

Off topic: what you think guys government decision to waste/invest 10000+ crores in BSNL, do you think anything positive will happen after this? Laziness and attitude of sarkari babus will continue even if GOI invest 10 billion in bsnl.

Chetan

Hopefully this helps in faster expansion. Lot of important circles to be integrated.

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