Vodafone Plc likely to sell equity in Indus Towers to Bharti Airtel; proceeds to be used to pare Vodafone Idea debt

Dubey said that Vodafone Plc recently sold its 2.4 per cent stake in Indus Towers at a valuation of Rs 1440 cr.

It is also good for Vi which will have some cash to pay its dues and reduce the debts: Zee Business

Vodafone Idea shares today ended almost 6 per cent up from the Wednesday closing price at Rs 11.05 on the NSE. The movement in this stock was triggered from the news about company’s plans to raise funds. The news could be about Vodafone Plc’s plans to buy additional stake in Vi, Senior Research Analyst Varun Dubey at Zee Business reports.

Dubey said that Vodafone Plc recently sold its 2.4 per cent stake in Indus Towers at a valuation of Rs 1440 crore.

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On 25 February, a statement by Bharti Airtel said that Vodafone Pc is willing to sell 4.7 per cent stake in Indus Towers. But there was a condition that the proceeds from the sale of equity will be invested in Vodafone Idea so that Vi pays its dues in Indus Towers.

The deal could be worth Rs 2,900 cr, Dubey said. The figure has been arrived at by extrapolating the valuation of its 2.4 per cent stake that has been sold.

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Dubey clarified that the 4.7 per cent stake sale by Vodafone Plc in Indus Towers will be on top of 2.4 per cent that it sold to some other buyer.

This time, Bharti Airtel will be buying the 4.7 per cent equity of Vodafone Plc, Dubey said.

Zee Business Managing Editor Anil Singhvi calls this an important development for Indus Towers which will get its dues. It also augurs well for Bharti Airtel which will have a higher holding in Indus Towers.

It is also good for Vi which will have some cash to pay its dues and reduce the debts.

Vodafone Idea is joint venture between Vodafone Group and the Aditya Birla Group (ABG), and both are committed to support Vi in its efforts to strengthen its balance sheet.

The market analyst Avinash Goraksha being bullish on Bharti Airtel and says that the management has indicated a likely price increase by the end of March. Apart from this, Google has taken stake in the company, which makes the stock of this telecom company more lucrative.

He believes, the telecom sector in FY23 will outperform, and will generate good cash flow, moreover, the pricing power of the overall sector is also back. On the other hand, Vodafone Idea is still reeling under balance sheet pressure as company is yet to generate cash flow, he added.

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