The agreement in on the principal condition that the amount paid shall be inducted by Vodafone as fresh equity in VIL and simultaneously remitted to Indus Towers to clear VIL's outstanding dues.
Bharti Airtel shares closed 3 per cent lower at Rs 666.90 on the BSE in intra-day trade on Monday after the company entered into an agreement with Vodafone Group to buy an additional 4.7 per cent stake in Indus Towers.
Meanwhile, Indus Towers shares traded flat at Rs 215, while the S&P BSE Sensex fell 1.7 per cent at 09:28 am. Vodafone Idea (VIL) shares closed 1 per cent lower at Rs 10.18 in intra-day trade on BSE.
Bharti Airtel has entered into an agreement with Euro Pacific Securities Limited, affiliated to Vodafone Group Plc, for the acquisition of stake in Tower Infrastructure Company. Agreement on the basic condition that the paid amount shall be incorporated by Vodafone as fresh equity in VIL and also remitted to Indus Towers to clear the dues of VIL.
The said takeover purchase will be at an attractive price which represents a significant discount generally available for such large block transactions. In addition, Airtel is also protected with a capped price which is less than the block price of Indus shares sold by Vodafone on February 24, 2022. This will be value addition for Airtel and will protect its existing significant stake in Indus Towers, Airtel. said in an exchange filing.
With this acquisition, Airtel's stake in Indus Towers will increase to 46.4 per cent. Vodafone currently holds 28.1 per cent stake in the company and its stake will come down to 21 per cent.
On Wednesday, February 23, 2022, the UK-headquartered telecommunications company announced its plans to sell its entire stake in Indus Towers. It earned Rs 1,443 crore by selling 2.4 per cent stake in a block deal to an unnamed investor on Thursday. The company is in talks with other investors to sell the remaining 21 per cent.
Vodafone and the Aditya Birla Group ("ABG"), VIL's promoters, are committed to supporting VIL in its efforts to strengthen its balance sheet. The first phase of the process involved US$2.1bn of AGR and conversion of spectrum interest into equity, which would make the Indian government the largest shareholder of VIL.
Vodafone and ABG intend to contribute to the issue of equity shares by VIL, once the terms of such capital increase have been assessed and decided by VIL's board of directors, Vodafone said.
Motilal Oswal Financial Services believes that Bharti may consider acquiring an additional 5 per cent stake, possibly to increase its stake to over 50 per cent and become a majority shareholder. This will protect Bharti's stake in the Indus, which provides it with vital infrastructure.
Indus Tower's dividend payout of Rs 20 per share implies a dividend yield of around 9-10 per cent at current prices, making it an attractive near-term opportunity for Bharti. However, with the uncertain outlook, valuations may remain low, the brokerage firm said.