Vodafone has this week confirmed that it has launched an initial sale of 63.6 million shares, equivalent to a roughly 2.4% stake, in India’s largest tower company, Indus Towers.
At the same time, Indian media claimed that Vodafone was also in advanced discussions to sell a further 4.7% stake, with sources suggesting that the potential buyer is likely Bharti Airtel.
Indus Towers, previously known as Bharti Infratel, has almost 180,000 towers across India and plays an integral role in the nation&’…
Vodafone has this week confirmed that it has launched an initial sale of 63.6 million shares, equivalent to a roughly 2.4% stake, in India’s largest tower company, Indus Towers.
At the same time, Indian media claimed that Vodafone was also in advanced discussions to sell a further 4.7% stake, with sources suggesting that the potential buyer is likely Bharti Airtel.
Indus Towers, previously known as Bharti Infratel, has almost 180,000 towers across India and plays an integral role in the nation’s mobile connectivity. According to the company, three of every five mobile calls in India are carried over the company’s infrastructure.
In March 2021, the company had an enterprise value of roughly $11.6 billion, with each individual tower worth around $65,000.
Vodafone currently owns 28.1% in the tower company, while Bharti Airtel hold a $41.8% stake.
Reports suggest that these stake sales are just the beginning, with discussions said to be ongoing “with several interested parties” for the sale of the rest of Vodafone’s stake in the business. The whole 28.1% stake has an estimated value of around $2.5 billion.
The funds raised from this stake sale will seemingly be used to help prop up Vodafone’s Indian joint venture, Vi, which has been on the verge of bankruptcy for many years now.
In the past, with Vi facing enormous adjusted gross revenue (AGR) payments to the Indian government and facing intense competition at cutthroat prices from Reliance Jio, Vodafone and fellow investor in the joint venture, Aditya Birla Group (ABG), had been loathe to further invest in what appeared to be a sinking ship.
However, a recently agreed relief package for the Indian telecoms market, alongside an industry-wide price hike, has made the survival of Vi far more viable, with both Vodafone and Aditya Birla saying they would continue to support the business after all, preparing to raise additional capital via the issuance of equity shares.
At the start of this year, the Indian government also agreed to take a 35.8% stake in Vi, converting the roughly $2.1 billion debt they owed the government into equity.
“The first step in this process included the conversion of $2.1 billion of AGR and spectrum interest into equity, which will make the Indian government the largest shareholder of Vi. Vodafone and ABG intend to contribute towards an issue of equity shares by Vi (a ‘capital raise’) once the terms of such a capital raise have been evaluated and decided on by the board of directors,” the company said in a statement.
But despite fresh investment and relative relief from government dues, Vi still has its work cut out for it, with the company recording its steepest subscriber fall in five months back in November. In that month alone, the company lost around 1.9 million mobile subscribers, while its rivals, Reliance Jio and Bharti Airtel, continue to grow, gaining 2 million and 1.3 million subscribers, respectively.
Vi’s subscriber base, at the time, had been declining for 36 consecutive months.
With both Airtel and Jio continuing to grow, Vi will need more than just the funding from this stake sale if it is to turn its fortunes around.
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