Vodafone Idea shares rise nearly 5% as reports suggest telco to divest entire stake in Indus Towers

Vodafone Idea is likely to offload its entire stake in the mobile tower operator for $2.3 billion (₹19,217 crore approximately). The company’s stake sale in the mobile tower operator is likely to be done through block deals next week, a Reuters report said, quoting sources.

Vodafone Idea currently holds 21.5% stake in Indus Towers through multiple group entities. The deal could be less than the entire stake held by VI in case the demand is weak, the report added.

The telecom service provider is planning a 5G rollout and is in the process of raising funds for the same. The telecom service provider has roped in Bank of America, Morgan Stanley and BNP Paribas to handle the deal, as per the report.

The telecom services provider informed the exchanges via a release on Thursday, June 13, that its board of directors approved a proposal to issue up to 166.08 crore fully paid-up equity shares of face value of ₹10 each in one or more tranches to raise ₹2,458 crore via preferential allotment from Nokia Solutions and Networks India Private Limited, and Ericsson India Private Limited.

The company said in the release that up to 102.7 shares of face value of ₹10 will be offered to Nokia. The shares will be offered at an issue price of ₹14.8 per share, including a ₹4.8 premium per share. The company seeks to raise ₹1,520 crore from the preferential issue to Nokia.

Vodafone will also offer up to 63.37 crore shares of face value of ₹10 each at an issue price of ₹14.8 per share including a premium of ₹4.8 per share to Ericsson. The company seeks to raise ₹938 crore from the issue, according to the release. Vodafone Idea informed the bourses that the preferential allotment price is 35% higher compared to the Follow-on Public Offer (FPO) price and will have a 6 month lock in period.

Vodafone Idea’s board will convene an extraordinary general meeting on July 10, 2024, to approve the preferential issue.

Post the preferential issue, Nokia and Ericsson will hold 1.5% and 0.9% stake in the telecom company, respectively. Aditya Birla Group and Vodafone will hold 37.3% stake, and Government of India’s shareholding will be 23.2%. The remaining 37.1% will be held by the public, the company mentioned in a release.

Shares of Vodafone Idea closed at ₹16.79 apiece, up by 4.48%, on the NSE.