The UK-based telecom operator Vodafone, in its annual report, has stated the plans for investing 1 billion Euro or around Rs 8,000 crore in the yet-to-be-merged entity with Idea Cellular. Both the telcos are expecting the proposed merger to get required approvals within this month itself. Furthermore, Vodafone stated that it would be ready to monetise the stake in Indus Towers if required, to make more investment in the merged entity. The Aditya Birla Group-owned Idea Cellular recently said that it would be investing Rs 15,000 crore in the merged entity, which will be called as Vodafone Idea Limited. And if Idea invests more, then Vodafone is ready to invest more as well, according to the annual report.
"Idea's equity raise of 0.8 billion euro in January 2018, which Vodafone Group will match at the time the merger closes; combined with other adjustments, we currently estimate a net capital injection into India of up to 1 billion euro at closing in June 2018," Vodafone Chief Financial Officer Nick read said in annual report.
The merger of Vodafone India and Idea Cellular was announced back in March 2017 and is currently waiting for the approval from Department of Telecom (DoT). Post the merger, Vodafone will have a stake of 47.5% in the newly formed entity and it will be the country's largest telecom operator with over 430 million subscribers. As of April 2018, Vodafone has over 223 million subscribers, while Idea Cellular is just behind with 216 million users under its belt.
"The company's financial leverage is currently high on a pro-forma basis. In the event that in the future the joint venture partners decide to put in additional funding, the Group would draw upon the value of its stake in Indus Towers," Vodafone said.
Furthermore, Vodafone's decision of willing to monetise its stake in India's largest mobile tower company Indus Towers doesn't come as a surprise. During 2017-18, Indus Towers paid dividends of 138 million Euro to the Vodafone Group and very recently, the top three telcos- Bharti Airtel, Vodafone and Idea Cellular announced the merger of Indus Towers into Bharti Infratel.
The newly formed tower company will be jointly managed by Bharti Airtel and Vodafone. Post the transaction, the combined company’s equity value is said to be Rs 965 Billion.