Vodafone Sells Final 3% Stake in Indus Towers via ₹2,802 Crore Deal

Shares worth ₹2,802 crore in Indus Towers were exchanged through a block deal on December 5, with UK-based Vodafone Group Plc likely being the seller. Around 8 crore shares, equating to a 3% stake in the telecom infrastructure company, were traded on the stock exchanges at an average price of ₹354 per share.

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The transaction caused Indus Towers' share price to jump by 5% in early trading. By 09:17 AM, the stock was priced at ₹365.40 on the NSE. Over the past year, the company’s shares have risen over 95%, increasing its market valuation to more than ₹96,000 crore.

Although the parties involved in the deal were not officially named, the sale follows Vodafone’s recent announcement of its plan to exit Indus Towers entirely by offloading its remaining 3% stake. This exit was facilitated through an accelerated book build offering, with the primary goal of using the proceeds to address the company’s debt obligations.

Vodafone’s move to divest its Indus Towers holdings stems from ongoing lender demands to settle loans backed by its Indian assets. Several international banks, including BNP Paribas, HSBC, and Bank of America, had insisted on the repayment of borrowings initially taken to fund Vodafone Idea’s rights issue. This left Vodafone with limited options, prompting the sale of its Indus Towers stake.

The transaction completes Vodafone’s gradual withdrawal from Indus Towers. Earlier in June 2024, the company sold an 18% stake for ₹15,300 crore, using the proceeds to significantly reduce its outstanding debts tied to Indian operations. After that sale, Vodafone’s ownership in Indus Towers dropped to 3%, culminating in the final divestment through today’s block deal.

Bharti Airtel, a co-promoter of Indus Towers, holds a 50% stake, making it the largest shareholder. Airtel had previously increased its shareholding during Vodafone’s earlier sell-offs.

The proceeds from the recent block deal are expected to be utilized primarily for repaying $101 million in loans secured against Vodafone’s Indian assets. Additionally, residual funds, estimated at ₹1,900-2,000 crore, may be injected into Vodafone Idea Ltd (Vi) as equity. According to brokerage firm Citi, this capital could help Vi settle outstanding dues to Indus Towers under their Master Services Agreements (MSAs).

Citi maintains a ‘buy’ rating on Indus Towers shares with a target price of ₹458. The brokerage predicts that residual funds from Vodafone’s exit could lead to an additional ₹7 per share payout for shareholders. Moreover, it estimates dividends of ₹11-12 per share in H2 FY25, potentially rising to over ₹20 per share annually in FY26 and FY27, offering an attractive dividend yield of 6% at current prices.

The block deal likely represents the final step in Vodafone’s efforts to streamline its involvement in the Indian telecom market and address global financial obligations. Kotak Mahindra Bank and Bank of America are reportedly acting as brokers for this transaction, according to earlier reports.