Bharti Airtel to buy additional 4.7% stake in Indus Towers from Vodafone

Deal signed on condition that proceeds are used to clear Vi's dues

Bharti Airtel has decided to acquire an additional 4.7 per cent stake in Indus Towers from Vodafone Group, the company announced on Friday. The two companies signed an agreement on the condition that Vodafone will use the proceeds to invest in Vodafone Idea (Vi) and the latter will clear its pending dues with Indus Towers.

“The said acquisition purchase would be at an attractive price representing a significant discount typically available for such large block transactions. In addition, Airtel is also protected with a capped price, which is lower than the price for the block of Indus shares sold by Vodafone on February 24. This shall be value accretive to Airtel and protect its existing significant shareholding in Indus Towers,” the company said.

Debt-ridden Vi has been unable to pay dues of Indus Towers, and both VIL and promoter Vodafone have proposed a payment plan to clear the outstanding amount by July 15. Indus Towers’ share price gained four per cent on the day and closed at Rs 214.20 apiece on Friday.

With the acquisition, Airtel’s shareholding in Indus Towers will increase to 46.4 per cent. Vodafone holds 28.1 per cent stake in the company at present and its shareholding will reduce to 21 per cent.

On Wednesday, the UK-headquartered telecom company announced its plan to sell its entire shareholding in Indus Towers. It sold 2.4 per cent stake to an unnamed investor in a block deal on Thursday netting Rs 1,443 crore. The company is in discussions with other investors to sell its remaining 21 per cent.

“The stability and sustenance of a specialised and strong infrastructure company like Indus Towers is vital for a continued strong provision of co-location services including the support to roll-out 5G. Such stability warrants a strong and stable shareholding structure to ensure financial stability and flexibility to respond to evolving needs of telecom operators,” Airtel said. The increase in stake would also enhance the value of its shareholding in Indus Towers and enable it to receive rich dividends, it added.

Earlier this month, the company had announced that it intends to spend Rs 1.17 trillion in business transactions with group entities over the next five years and has sought shareholder approval as these are related party transactions. Of this, Rs 88,000 crore worth transactions are planned with Indus Towers, considering increased requirements of passive infrastructure during 5G roll out in the country.

The Sunil Bharti Mittal-led firm said the transaction allows it to secure continued strong provision of services from the mobile tower company, protects and enhances Airtel's value in Indus Towers while enabling it to receive rich dividends and paving way for subsequent financial consolidation of Indus Towers in Airtel.

The company’s portfolio of over 184,748 telecom towers makes it one of the largest tower infrastructure providers in the country with presence in all 22 telecom circles. It caters to all wireless telecommunication service providers in India.

Indus Towers posted about 16 per cent rise in consolidated profit at Rs 1,570.8 crore in the three months ended December 2021, while revenues stood at Rs 6,927 crore during the same period.

Telecom service providers got a shot in the arm with the government last year approving a blockbuster relief package that included a four-year break for companies from paying statutory dues, permission to share scarce airwaves, change in the definition of revenue on which levies are paid and 100 per cent foreign investment through the automatic route.

With inputs from PTI