New Delhi: Bharti Airtel has entered an agreement to buy 4.7 percent stake in Indus Towers from Vodafone Plc, the former said in an exchange filing on February 25.
“Airtel has accordingly entered into an agreement with Vodafone on one condition that the amount paid shall be inducted by Vodafone as fresh equity in Vodafone Idea Limited (VIL) and simultaneously remitted to Indus Towers to clear VIL’s outstanding dues,” the company said in a regulatory filing.
On Thursday,February 24, Vodafone Plc sold 2.4 percent stake in Indus Towers to Bharti Airtel through a block deal on the bourses. Prior to the transaction, Vodafone Plc held 28 percent stake in the tower company while Bharti Airtel had 42 percent stake.
“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 as also paves the way for subsequent financial consolidation of Indus Towers in Airtel,” Bharti Airtel said.
The telecom major said that any acquisition will only be done when such proceeds are confirmed to be utilised by Vodafone to infuse as equity into Vodafone Idea including any regulatory or shareholders’ approval being fully obtained.
Bharti Airtel also clarified that the acquisition of shares would be at an “attractive price” representing a significant discount typically available for such large block transactions.
“In addition, 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,” Bharti Airtel said.
Indus Towers, formerly Bharti Infratel Ltd, is a leading provider of passive telecom infrastructure. It deploys, owns and manages telecom towers and communication structures for various mobile operators.
The firm’s portfolio of over 1,84,748 telecom towers, makes it one of the largest tower infrastructure providers in the country with presence in all 22 telecom circles. Indus Towers caters to all wireless telecommunication service providers in India.
Indus Towers posted about 16% rise in consolidated profit at ₹1,570.8 crore in the three months ended December 2021 while revenues stood at ₹6,927 crore during the same period.
Indus Tower merged with Bharti Infratel in November 2020. The company’s total mobile tower base increased to 1,84,748 from 1,75,510 on a year-on-year basis.
It may be recalled that the telecom service providers got a shot in the arm with the government, last year, approving a blockbuster relief package that included a four-year break for companies from paying statutory dues, permission to share scarce airwaves, change in the definition of revenue on which levies are paid and 100% foreign investment through the automatic route.
The Centre also gave telcos the option to convert the interest amount pertaining to the moratorium period into equity.
The telecom operator said that the stability and sustenance of Indus Towers were vital for the strong provision of co-location services including the support to roll out 5G services in India.
“Such stability warrants a strong and stable shareholding structure to ensure financial stability and flexibility to respond to evolving needs of telecom operators,” Airtel said.
That said, Bharti Airtel reiterated its commitment to monetise its stake in Indus Towers 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 company said.