Vodafone Group To Exit Indus Towers Stake To Repay Domestic Debt

UK's Vodafone Group Plc will divest its entire 3% stake in Indus Towers Ltd. via open market deals, the company announced on Wednesday.

The British telecom operator will offload 7.9 crore shares that are held by its local affiliates Omega Telecom Holdings Pvt. and Usha Martin Telematics Ltd.

Based on Indus Tower's last closing price of Rs 358.75, the transaction value is expected to be around Rs 2,841 crore.

The proceeds from the divestment will be used firstly to repay Vodafone's outstanding borrowings of around $101 million to existing lenders, secured against Vodafone's Indian assets, according to a stock exchange filing in London.

Separately, Indus Towers said it has released the pledge on 3% shares held by Vodafone to execute the sale and utilise the proceeds as per the terms of the security package provided by the UK company.

Under the terms of the security arrangements entered into between Vodafone and Indus Towers, the latter has security over the residual proceeds from the placing to guarantee obligations from Vodafone Idea Ltd. to Indus Towers under the Master Services Agreements.

As permitted under the security arrangements, Vodafone intends to contribute the residual proceeds towards an issue of new equity shares by Vodafone Idea once the terms of such a fundraise have been evaluated and decided on by the board. The proceeds from the fundraise would be used by Vi to pay outstanding dues to Indus Towers.

Following the repayment of Vodafone's outstanding borrowings, if any Indus shares remain, such shares and any proceeds that are not used by Vodafone to subscribe to new shares in Vi would be available to Indus to guarantee Vi's obligations under the MSAs.

Indus Towers, India's largest mobile tower installation company, became a subsidiary of Bharti Airtel Ltd. in August following the buyback of shares. As of September, the Sunil Bharti Mittal-led telecom company had 50% equity in the company.