Bharti Airtel In Conversation For a Majority Stake In Indus Towers: Report Bharti Airtel is negotiating with Vodafone Plc to acquire an additional 3 per cent stake in Indus Towers, India's largest mobile tower company
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Bharti Airtel is negotiating with Vodafone Plc to acquire an additional 3 per cent stake in Indus Towers, India's largest mobile tower company. Should the discussions succeed, Bharti Airtel's stake in Indus Towers will rise to a controlling 52 per cent, reports CNBC-TV18, citing anonymous sources. Last week, Vodafone sold an 18 per cent stake in Indus Towers through block deals, raising nearly INR 15,300 crore. Following these transactions, Vodafone retains a 3.1 per cent shareholding in Indus Towers.
In addition, Bharti Airtel plans to merge its rapidly growing data centre business, Nxtra, with Indus Towers. This is part of a broader strategy to consolidate its operations, as reported by CNBC-TV18. The merger would provide Indus Towers with the necessary funds for upcoming auctions and support Nxtra's expansion and growth. Bharti Airtel recently increased its stake in Indus Towers by 1 per cent through these block deals, bringing its total holding to nearly 49 per cent. If the current negotiations succeed, Bharti Airtel will become the majority shareholder in Indus Towers with a 52 per cent stake.
Vodafone Group aims to sell its entire $2.3 billion stake in Indus Towers as part of a strategic effort to reduce its substantial debt, as reported by Reuters. The proceeds from the deal will help trim Vodafone's significant $42.17 billion net debt. Although Vodafone announced its intention to sell its then, 28 per cent stake in Indus Towers in 2022, progress had been slow until the recent transactions.
Indus Towers has indicated that Vodafone's outstanding dues amount to nearly INR 5,400 crore. The proceeds from Vodafone's sale of its Indus Towers stake are expected to be used to settle a significant portion of these dues. The merger would also offer an exit strategy for Carlyle, the American private equity firm that owns a 24 per cent stake in Nxtra, acquired in 2020.
"Nxtra's dependence on parent Airtel for business performance does not value it correctly at present, investors are likely to ascribe a higher value once it is in a separate entity. In a way, arm's length transaction with Airtel will be valued better if Nxtra is in a separate company," a source was quoted by CNBC-TV18
As the telecom sector faces a series of tariff hikes, Indus Towers, being the largest tower company in India, is poised to play a critical role in enhancing the financial health of service providers, according to the report.
