Vodafone reportedly on cusp of $2.3 billion sale of Indus Tower stake

This is according to unnamed sources cited by Reuters, which claim the telco plans to conduct the sale via so-called block deals – transactions of at least 500,000 shares, with a combined value of at least INR100 million ($1.2 million), that take place within two specific trading windows per day.

Designed with institutional investors in mind, block trades are a way of selling a large number of shares to interested parties without causing big movements in the price. The shares come with a block reference price and bidders must not stray more than 1% above or below it.

Reuters' sources said Vodafone hasn't decided on the final size of the stake sale, and it could be less than the full 21.5% if demand proves lacking.

Demand might not be a problem, if sources cited in a separate report by Mint are anything to go by. According to the outlet, private equity firm I Squared Capital and alternative investment firm Stonepeak are both interested in the stake, and talks are said to be in advanced stages.

Based on Indus Towers' market cap at close of play in Mumbai on Friday, offloading the entire stake would bring in around $2.3 billion.

That's a good deal more than the $1.3 billion Voda stood to gain in 2022, when it was rumoured to be in talks to sell its Indus stake to Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ).

No deal materialised though, and since then Indus Towers' footprint has increased from 186,000 to almost 220,000 sites across India, driven by continued strong demand for mobile data, including 5G.

In April, the Economic Times reported that Bharti Airtel was in talks to acquire Voda's Indus stake. Airtel is already the single biggest shareholder in the towerco, with a stake weighing in at 48%. However, these rumours were swiftly denied.

By selling out of Indus, Vodafone would be following in the footsteps of private equity firm KKR and the Canada Pension Plan Investment Board (CPPIB). Earlier this year, they too carried out block deals – with KKR selling its 4.85% stake and CPPIB offloading 2.14% – for a combined sum of $475.6 million.

Reuters sources claim Vodafone plans to use the proceeds to pay down net debt, which currently weighs in at a hefty $42.2 billion.

Vodafone's embattled Indian unit, Vodafone Idea (Vi), is still thought to owe Indus Towers around INR100 billion ($1.2 billion). Voda bringing in north of $2 billion by selling its Indus stake would help Vi settle that debt and then some.