UK’s Vodafone Group and India’s Aditya Birla Group are facing increasing pressure from the government and lenders to infuse equity into Vodafone Idea-their cash-strapped telecom joint venture-to shore up external investor confidence. One of the avenues available to the British telco is selling its remaining or part of the 21.05% stake in Indus and injecting the proceeds into Vi. Bharti Airtel owns 47.95% in Indus.
The British telco, on its part, has previously said it was talking to several interested parties to sell its stake in Indus. ET had earlier reported that Canadian pension fund, Caisse de depot et placement du Quebec (CDPQ), was in talks to buy Vodafone’s 21.05% stake in Indus. But the talks haven’t fructified as yet. Airtel insiders though said the company would not come in the way if Vodafone Plc found an external buyer for its stake in the tower company.
“Airtel is open to waiving its right of first refusal if Vodafone Plc decides to sell its stake in Indus to an external investor,” a top company executive told ET. Vodafone Group declined to offer comment, while ET’s queries to Vi and Bharti Airtel went unanswered as of press time.
Airtel shares gained 0.93% to close at ₹765.95, while shares of Indus Towers lost 3.22% to close at ₹176 on BSE on Tuesday. Vi shares closed 0.97% up at ₹7.29.The health of loss-making is critical for Indus Towers’ financial stability, and in turn, Bharti Airtel’s stock, say analysts. Vi accounts for over 40% of Indus revenue.
In March 2022, Bharti Airtel bought a 4.7% stake in Indus Towers from Vodafone Group Plc for ₹2,388 crore in cash, to increase its stake to 47.95%. In addition, the UK company sold a 2.4% stake for ₹1,443 crore. Vi then invested the proceeds in Vi, which in turn used the money to clear some of its payment arrears to the telecom tower company.
According to industry executives, Vodafone Plc had pledged a part of its shareholding in Indus Towers to settle its outstanding dues. Subsequently, it approached Indus Towers with a request to allow it to sell these shares with an undertaking to pay the tower company through equity infusion into Vi. It, thus, effectively used the same proceeds to inject equity of ₹3,811 crore into Vi and pay Indus Towers dues.
A report by brokerage
dated January 10 said that Sunil Mittal-led Airtel is likely to increase its stake further in Indus to over 50% in 2023. Airtel declined to comment on this.
Vi’s dues towards Indus have mounted to around ₹7,500 crore, despite the recent payments by the telco for the tower company. It has given a commitment to Indus to pay 100% of its current dues from January onwards, and also clear its outstanding as of December 31, 2022, over seven months, starting this month.