Vodafone Plc sold a nearly 2.4 percent stake in India’s largest tower company – Indus Towers Ltd. The global telecom player is also looking to sell its remaining 25.7 percent stake in the tower company in probably two tranches. For the 4.7 percent stake, it is already in talks with one of the largest shareholders of Indus Towers, while for the remaining 21 percent it is in talks with several other investors. On an immediate basis, the company will be selling a 7.1 percent stake, and the remaining 21 percent will happen at a later stage.
Bharti Airtel Ltd. is the largest shareholder in Indus Towers.
The funds that Vodafone Plc will get by selling the 7.1 percent stake will be infused in cash-strapped Vodafone Idea Ltd. The latter will use the funds to repay the dues owed to the tower entity. Indus Towers receivables had surged to Rs. 10,900 crore in Q3FY22 and a significant amount of this was due from Vodafone Idea.
Share prices of Indus Towers declined as much as 16 percent – most since March 18, 2020. Two possible reasons behind this fall – overhang of further stake sale and renegotiation of tower rentals on the lower side. Share prices of Bharti Airtel also declined as much as 8.4 percent – most in the last 17 months. This is because of poor capital allocation concerns. Earlier when Airtel had bought a stake in Indus in December 2020 and in the DTH business in February 2021, the share price had declined.
Even share prices of Vodafone Idea declined, despite the potential fund infusion. This is because the funds infused will be used by the company only to repay its operational creditors and not for capex and growth.
