Vodafone Group Wants To Sell 5% Stake To Airtel & Raise Rs 3300 Crore For Vodafone-Idea: Is It Possible?

Vodafone Group is in talks to sell up to a 5% stake in tower firm Indus Towers to Bharti Airtel.

Indus Towers provides passive telecom infrastructure.

It deploys, owns and manages telecom towers and communication structures for various mobile operators.

Proceeds 

Bharti Airtel and UK’s Vodafone Group currently hold 41.73% and 28.12% share in the company, respectively.

Indus Towers closed 0.4% lower at Rs 251.20 on the BSE Wednesday.

At the current price, a 5% stake in Indus Towers, the country’s largest telecom tower company, could fetch Vodafone Group over Rs 3,300 crore.

This would give Vodafone Idea the much-needed capital infusion from its British parent Vodafone Group.

Need Of The Hour

It will use the proceeds to plough into Vodafone Idea Ltd, as the self-mandated March deadline to raise funds from external investors draws near.

This comes after Vi chose to convert its AGR and spectrum dues into equity, making the Indian government the biggest shareholder of the company.

Vodafone Group and the Aditya Birla Group (ABG) are the telcos co-promoters, owning 44.39% and 27.66%, respectively.

Capital Urgently Required

Fund infusion by Vodafone Idea’s promoters is crucial in order to raise funds from external investors.

Apart from Vodafone Group, ABG chairman Kumar Mangalam Birla is also expected to invest around $200 million of his own capital into Vi.

Vi presently has cash balance of Rs 1500 crore and net debt of Rs 1.97 lakh crore as of December-end.

Losses

Its net loss for the fiscal third quarter ended December 31 grew to Rs 7,234.1 crore from Rs 7,144.6 crore the year earlier due to rising operating and interest expenses.

To add to its woes it lost a further 5.8 million users, ending December with just over 247 million subscribers.

Analysts say that it needs an immediate cash infusion to build on the gains of the recent tariff hikes.

Some Hope Left

It has been in talks with private equity players such as Apollo Global and Carlyle for around $1 billion in equity and debt funding in an attempt to turn around operations.

It can also benefit from a reforms package announced by the government last September to give it a fighting chance against rivals Reliance Jio and Bharti Airtel, and revive its business.

Aside from its fundraising efforts Vi is also mulling over the sale of overseas convertible bonds to raise $750 million to $1 billion (Rs 5,550-7,400 crore) at the earliest.