Indus Tower shares up 5% on stake sale by UK's Vodafone Plc; Vi, Airtel shares rise up to 4%

Shares of Indus Tower rose nearly 5% in opening trade on Thursday, extending gains for the third straight session, after the UK-based telecom operator Vodafone Plc, a promoter entity of Vodafone Idea (Vi), announced to sell its remaining stake in the mobile tower installation company. The Vi shares also saw buying, with the telecom stock climbing over 4% in early trade today after ending 4.2% higher in the previous session.

Indus Tower shares rose as much as 4.8% to ₹376 in early trade today, while the market capitalisation crossed ₹95,900 crore. Similarly, Vodafone Idea shares gained 4.5% to ₹8.79 per share on the BSE, while rival Bharti Airtel climbed over 1% to ₹1,602.45 in opening trade. Meanwhile, the equity benchmark Sensex and Nifty edged higher in opening trade, gaining 0.2% each.

On Wednesday, Vodafone Group Plc said that it will exit from the telecom infrastructure company by selling its remaining 3% stake in the company via an accelerated book build offering. The company intends to use fund proceeds primarily for repaying debt.

"As per the terms of the security package provided by Vodafone promoters to secure the payment obligation of Vodafone Idea Ltd under the Master Services Agreements, the company released the pledge on 3.003% shares held by Vodafone Promoters in the company today i.e., on December 04, 2024 for the relevant Vodafone Promoters to execute the sale of such shares and utilise the proceeds as per the terms of the security package provided by Vodafone Promoters," Indus Towers said in an exchange filing yesterday.

As per the regulatory filing, Vodafone Group Plc (Vodafone) has launched a placing of its remaining 79.2 million shares in Indus Towers Limited, representing 3.0% of Indus' outstanding share capital through an accelerated book build offering. The statement says the proceeds will be used firstly to repay Vodafone's outstanding borrowings of $101 million to Vodafone's existing lenders, secured against Vodafone's Indian assets.

Under the terms of the security arrangements entered into between Vodafone and Indus, Indus has a security over the residual proceeds from the placing to guarantee obligations from Vodafone Idea Ltd to Indus under the Master Services Agreements (MSAs).

Vodafone intends to contribute the residual proceeds from the placing (after repayment of Vodafone's outstanding borrowings) towards an issue of new equity shares by Vi once the terms of such a capital raise have been evaluated and decided by its board. The proceeds will be also used by Vi to pay outstanding MSA dues to Indus.

“Following the repayment of Vodafone's outstanding borrowings, if any Indus shares remain, such Indus Shares and any proceeds which are not used by Vodafone to subscribe to new shares in Vi would be available to Indus to guarantee Vi's obligations under the MSAs,” the release adds.

Mobile tower installation company Indus Towers was established in November 2007 by Bharti Infratel, Vodafone Essar, and Idea Cellular (now Vi), with an objective to merge their passive infrastructure assets across 16 telecom circles.

Over the years, Vodafone disinvested its shareholding in Indus Towers, while Bharti Airtel raised its stake in the company during the sale. In June 2024, Vodafone offloaded 18% stake in Indus Towers for Rs 15,300 crore, reducing its holding to 3%, after selling 7.1% shares in 2022. Meanwhile, Bharti Airtel, India's second largest telecom firm raised its stake in Indus Towers to 50%.

Vi to raise ₹2,000 crore

In a separate development, Vi, a joint venture between Vodafone and the Aditya Birla Group, on Wednesday announced that its board will meet on December 9 to consider proposal for raising of funds up to ₹2,000 crore by way of issuance of equity shares and convertible securities on a preferential basis to one or more entities belonging to Vodafone Group (one of the Promoters of the Company).

Vi recently raised ₹20,100 crore in equity (through a combination of a follow-on public offer and capital infusion from promoters; excluding vendors). In addition, the company said it intended to raise another ₹25,000 crore in debt ($3 bn), though it didn’t specify a timeline.

In Q2 earnings call last month, Vodafone Idea CEO Akshya Moondra had said that the company may be may be forced to delay its ₹25,000 crore debt-funding plan due to lenders' 'wait and watch' stance over the AGR (Adjusted Gross Revenue) dues payable to the government after the Supreme Court rejected the company's curative petition to re-compute the AGR figure. Vi owes ₹70,320 crore in AGR dues to the Department of Telecommunications (DoT).

The gross debt of ₹2.1 lakh crore ($26 billion), of which only about $600 mn is owed to banks and financial institutions, with the remainder payable to the government of India towards spectrum ($17.2 bn) and AGR (adjusted gross revenue) dues ($8.5 bn). These government dues are currently under moratorium until October ‘25, after which the telecom operator will have substantial payment obligations. The company’s recent filings show that its repayment obligation would be $3.3 bn in FY26, rising to $5 bn in FY27 (excluding dues not under moratorium).

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