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Bharti Airtel (Airtel) on Friday confirmed that it has entered into an agreement with Vodafone to buy 4.7 per cent equity interest in Indus Towers on the principal condition that the amount paid shall be inducted by Vodafone as fresh equity in Vodafone Idea Ltd (VIL) and simultaneously remitted to Indus Towers to clear VIL’s outstanding dues.
The acquisition would be at an attractive price representing a discount typically available for such large block transactions, it said and added that 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.
This shall be value accretive to Airtel and protect its existing significant shareholding in Indus Towers. Debt-ridden VIL has been unable to pay dues of Indus Towers, and both VIL and promoter Vodafone have proposed a payment plan to clear the outstanding amount by July 15.
VIL has committed to pay certain minimum amount each month to Indus Towers in the meantime.
“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,” it said adding that this self-paying capital allocation serves multiple strategic purposes for Airtel.
It further said that any such acquisition shall only be done when such proceeds are confirmed to be utilised by Vodafone to infuse as equity into VIL including any regulatory or shareholders’ approval being fully obtained.
Asset monetisation
“Airtel remains committed to look at opportunities for monetising this vital asset 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,” it added.
According to the company, the telecom market structure has started to stabilise on account of the efforts of the government including the recent relief package. Airtel said it supports the government’s desire to have three private operators to serve the Indian telecom market which is also in the best interest of Indus Towers.
“With the likely introduction of 5G in the future, we believe a lot more infrastructure would be required in which Indus Towers, an undisputed leader, has a significant role to play and partake the potential growth in the business,” it added.
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