Vodafone raises $1.8 billion from Indus stake sale

The rumours proved to be true this time round – Vodafone has raised a sizeable chunk of change by selling most of its shares in Indus Towers.

Nick Wood

June 20, 2024

2 Min Read

The telco announced it sold 484.7 million shares, to be precise, equating to 18% of its 21.5% stake. Vodafone said, however, that its holding has been reduced to 3.1%, which means something isn't quite adding up here – perhaps some enthusiastic rounding down is to blame.

The total raised weighs in at INR153 billion ($1.82 billion), which puts the value of Voda's entire stake at approximately $2.12 billion.

That's pretty close to the $2.3 billion figure that was doing the rounds earlier this week, when unnamed sources told Reuters that Voda was planning to sell out of the Indian tower operator.

According to a report by Mint, SBI Mutual Fund and Bharti Airtel were among the biggest buyers. The former acquired more than 35 million shares, paying some INR11.2 billion ($133.6 million). Bharti Airtel – already Indus Towers' biggest single shareholder – increased its stake to 49% from 48%, paying the princely sum of INR8.6 billion for 26.95 million shares.

Vodafone said the proceeds will be used to pay off outstanding bank borrowings of $1.93 billion secured against its Indian assets.

That means Voda doesn't plan on using the money to pay off the estimated $1.2 billion it reportedly still owes to Indus.

It also won't do anything to alleviate the debt burden at its Indian joint venture, Vodafone Idea (Vi), although it would have been a fairly small drop in the ocean of debt that Vi is currently swimming in.

At the end of the March quarter, long and short-term bank borrowings and deferred payment obligations weighed in at a combined INR2.08 trillion ($24.8 billion).

What's more, during the quarterly earnings call, Vi CEO Akshaya Moondra said the telco was in talks with banks over a debt raise totalling INR250 billion ($3 billion), plus bank guarantees totalling INR100 billion ($1.2 billion).

On the one hand, banks being prepared to take on the risk of lending to Vi is a sign that the ailing telco is on financially firmer ground, but on the other hand, that debt will have to be serviced at some point, and until Vi turns a profit, servicing it will burn through cash on hand.

Vi and profits don't generally appear in the same sentence these days.

In the three months to March, its loss widened year-on-year to INR76.8 billion ($918.5 million) from INR64.1 billion, due to higher interest and financing costs. Taking on yet more debt is unlikely to bring those costs down any time soon.

About the Author

Nick Wood

Nick is a freelancer who has covered the global telecoms industry for more than 15 years. Areas of expertise include operator strategies; M&As; and emerging technologies, among others. As a freelancer, Nick has contributed news and features for many well-known industry publications. Before that, he wrote daily news and regular features as deputy editor of Total Telecom. He has a first-class honours degree in journalism from the University of Westminster.

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