Vodafone Plc to offload 3% stake in Indus Towers

British telecom major Vodafone Group Plc is offloading its remainder 3% stake in Indus Towers, entirely exiting India's largest telecom tower provider, which is now a Bharti Airtel subsidiary.

"Vodafone Group Plc ("Vodafone") announces that it has launched a placing of its remaining 79.2 million shares in Indus Towers Limited ("Indus" and such shares, the "Indus Shares") representing 3.0% of Indus' outstanding share capital through an accelerated book build offering (the "Placing")1. The proceeds from the Placing will be used firstly to repay Vodafone's outstanding borrowings of c.US$101 million to Vodafone's existing lenders, secured against Vodafone's Indian assets," the company said in a release.

Vodafone will clear its debt of $101 million, or about ₹856 crore, and use the residual amount to pay outstanding dues of its Indian venture, Vodafone Idea.

The transaction is valued at around ₹2,841 crore as per Wednesday's closing price of Indus Towers stock at ₹358.75 apiece on the BSE.

Following the sale, Vodafone's stake in Indus Towers will drop below a percent. Before this transaction, Vodafone held 82.5 million shares, or 3.1% of Indus Towers.

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Earlier in mid-June this year, Vodafone sold an 18% stake in Indus Towers for about ₹15,300 crore. After the transaction, the telco held a 3.1% stake in Indus Towers.

Indus Towers is India's largest telecom tower provider, with over 219,736 towers across all 22 telecom circles. Bharti Airtel is the largest shareholder with a 48.95% stake.

Meanwhile, Vodafone Idea shares settled nearly 2.5% higher on the BSE, quoting at ₹8.41 apiece. Indus Towers also settled higher, quoting at ₹358.75 per share, rising 1.5%.

More recently, global brokerage firm Macquarie upgraded the Vodafone Idea stock to 'Neutral', saying the shares are too cheap after a 60% fall in recent weeks. However, even the latest target price is ₹7, lower than the current market price.

Indus Towers stock was also upgraded. The brokerage said it expects a slight improvement in the tenancy ratio as Kumar Mangalam Birla's telecom venture goes for gradual expansion.

Another brokerage, CLSA, has an underperform rating for Vodafone Idea with a share price target of ₹6 after pointing out that the telco continues to lose its market share, which is concerning. That said, it also pointed out that Vodafone Idea's equity fundraise is positive.