Vodafone Plc to Divest 9.9% Stake in Indus Towers for Over ₹9,000 Crore

Vodafone Group Plc, a promoter entity of Vodafone Idea Ltd, is set to divest up to 9.94% equity in Indus Towers Ltd through block deals on Wednesday, according to sources reported by CNBC-TV18.

The price band for these transactions is set between ₹310-341 per share, reflecting a discount of up to 10% from Tuesday's closing price. This deal is expected to be valued between ₹8,308 crore and ₹9,138 crore based on the price band. As of the end of the March quarter, Vodafone Plc held a 21.05% stake in Indus Towers.

90-Day Lock-In Period for Further Sale

Post this transaction, Vodafone Plc will be subject to a 90-day lock-in period, restricting further sales of shares during this time. This measure ensures market stability and allows for orderly trading post-transaction.

Potential Infusion into Vodafone Idea

Brokerage firm UBS noted in a report that proceeds from this deal are likely to be infused into Vodafone Idea. This move could provide much-needed liquidity and support for Vodafone Idea's operations and financial commitments.

Advisors for the Stake Sale

To facilitate this significant stake sale in the Indian stock markets, Vodafone has enlisted the expertise of Bank of America, Morgan Stanley, and BNP Paribas as advisors. This strategic move follows Vodafone's earlier announcement to sell its 28% stake in Indus Towers in 2022.

However, only a portion of that stake has been divested so far, with previous negotiations with rival telecom companies not reaching a conclusive end.

Debt Repayment Strategy

The primary objective of this stake sale is to reduce Vodafone's substantial net debt, which stands at $42.17 billion. The proceeds from the sale will be directed towards debt repayment, easing the company's financial burden. This strategic financial maneuver is crucial for Vodafone as it seeks to improve its balance sheet and financial health.

Indus Towers' Market Position

Indus Towers is a significant player in the tower infrastructure industry, boasting nearly 220,000 towers across India. Bharti Airtel, one of India's leading telecom companies, is a major shareholder in Indus Towers. This strong market position underscores the value and strategic importance of Vodafone's stake in the company.

Bharti Airtel's Milestone

In related industry news, Bharti Airtel has recently achieved a significant milestone by entering India's $100-billion market cap club. This accomplishment highlights the dynamic and competitive nature of the Indian telecom market, within which Indus Towers and its stakeholders operate.

Conclusion

Vodafone Group Plc's planned sale of up to 9.94% equity in Indus Towers is a strategic move aimed at raising significant capital, which is likely to be used for debt reduction and potential infusion into Vodafone Idea.

The transaction involves a carefully structured price band and is supported by leading financial advisors. This sale is a part of Vodafone's ongoing efforts to streamline its operations and strengthen its financial position amidst a competitive telecom market.