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Bharti Airtel to buy 4.7% equity in Indus Towers from Vodafone

telecom | Feb 25, 2022 4:58 PM IST

Bharti Airtel to buy 4.7% equity in Indus Towers from Vodafone

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Airtel has put forth a principal condition that the amount paid shall be inducted by Vodafone as fresh equity in Vodafone Idea (Vi) and simultaneously remitted to Indus Towers to clear Vi’s outstanding dues. According to reports, the stake is valued at more than Rs 3,300 crore.

Bharti Airtel on Friday said it had entered into an agreement with Vodafone to buy 4.7 percent equity interest in Indus Towers on the principal condition that the amount paid shall be inducted by Vodafone as fresh equity in Vodafone Idea (Vi) and simultaneously remitted to Indus Towers to clear Vi’s outstanding dues. According to reports, the stake is valued at more than Rs 3,300 crore.

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"The said acquisition purchase would be at an attractive price representing a significant discount typically available for such large block transactions," according to Bharti Airtel. "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, 2022. This shall be value accretive to Airtel and protect its existing significant shareholding in Indus Towers."
We believe this transaction allows Airtel to secure continued strong provision of services from Indus Towers, protects and enhances Airtel’s value in Indus Towers, enables it to receive rich dividends and also paves the way for subsequent financial consolidation of Indus Towers in Airtel.
"We believe that this self-paying capital allocation serves multiple strategic purposes for Airtel. Airtel remains committed to looking at opportunities for monetising this vital asset at an appropriate time. In doing so it will ensure that the tower company has been stabilised and any new strategic or financial investor/s has the ability to continue to serve the critical needs of Airtel," the firm said.
Vi's March deadline to raise funds from external sources is nearing. Days ago Britain's Vodafone Group said it was trying to sell stake in Indus Towers to "support the Indian entity's efforts to strengthen the balance sheet".
Vodafone Group holds 28.1 percent in Indus Towers. At present, 7.1 percent is pledged to Indus as part of the security arrangements entered into between Vodafone and Indus at the time of the merger of Indus Towers with Bharti Infratel, according to the British telco. Of the 7.1 percent, apart from the 4.7 percent stake sale in Indus Towers to Bharti Airtel, Vodafone has put 2.4 percent in Indus for sale via blocks.
Vodafone said it was also in discussions with "several interested parties in relation to a potential sale of the residual shareholding (of 21 percent)" as well.
For supporting Vi, the British telecom had said the first step would be a "conversion of $2.1 billion of AGR (adjusted gross revenue) and spectrum interest into equity, which will make the Indian government the largest shareholder of Vi".
"Vodafone and Aditya Birla Group (promoters of Vi) intend to contribute towards an issue of equity shares by Vi once the terms of such a capital raise have been evaluated and decided on by the board of directors of Vi," the British telco said. It said a further announcement will be made when appropriate. 
Indus Towers provides passive telecom infrastructure. It deploys, owns, and manages telecom towers and communication structures for various mobile operators.
The company's portfolio of over 1,84,748 telecom towers makes it one of the largest tower infrastructure providers in the country with a presence in all 22 telecom circles. Indus Towers caters to all wireless telecommunication service providers in India.
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