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Indus Towers announced on Thursday that it released a 3% pledge of shares by Vodafone Promoters; What investors should know
Indus Towers block deal
Shares of Indus Towers surged nearly 5% in early trade on Thursday, extending gains for the third consecutive session, after Vodafone Plc, a UK-based telecom operator and promoter of Vodafone Idea (Vi), announced plans to sell its remaining stake in the mobile tower company. Vodafone Idea’s stock also saw an uptick, rising over 4% in early trade, following a 4.2% gain in the previous session. However, around 10 am, Vodafone Idea shares dropped 2.2% on Thursday to Rs 8.22 on BSE after completing its exit from Indus Towers through a Rs 2,800 crore block deal.
Indus Towers shares climbed 4.8% to Rs 376, pushing its market capitalization past Rs 95,900 crore. Similarly, Bharti Airtel rose over 1%, reaching Rs 1,602.45 in early trade on the BSE. Meanwhile, India’s benchmark indices, the Sensex and Nifty, edged higher at the open, both gaining 0.2%.
The parties involved in the transaction were not disclosed, but the deal comes just one day after UK-based Vodafone Group Plc announced it would sell its remaining 3% stake in Indus Towers, marking its complete exit from the Indian tower company. The sale is expected to be conducted through an accelerated book build offering, with the proceeds primarily aimed at repaying debt.
Vodafone’s decision to divest its stake in Indus Towers stems from mounting pressure from lenders to repay loans secured against its Indian assets. A group of foreign banks, including BNP Paribas, HSBC, and Bank of America, had demanded the full repayment of borrowings initially raised to support Vodafone Idea’s rights issue. This left Vodafone with limited options, ultimately leading to the sale of its holdings in Indus Towers.
This transaction marks the final phase of Vodafone’s exit from Indus Towers. In June 2024, Vodafone sold an 18% stake in the company, raising Rs 15,300 crore. The proceeds were largely used to pay down outstanding loans secured against Vodafone’s Indian assets. Following that sale, Vodafone’s stake in Indus Towers was reduced to 3%, setting the stage for today’s final divestment through a block deal. Bharti Airtel, the other promoter of Indus Towers, holds a 50% stake in the company, making it the largest shareholder. Airtel had previously increased its stake during Vodafone’s earlier sell-offs.
Proceeds from the block deal are expected to be primarily used to repay $101 million in borrowings secured against Vodafone’s Indian assets. The remaining funds, estimated at Rs 1,900-2,000 crore, are likely to be injected as equity into Vodafone Idea Ltd (Vi), according to brokerage firm Citi. This infusion would help Vi settle its outstanding dues to Indus Towers under their Master Services Agreements (MSAs).
Citi maintains a ‘buy’ rating on Indus Towers shares, with a target price of Rs 458. The brokerage believes that the residual funds from Vodafone’s exit could translate into additional payouts of Rs 7 per share for shareholders. Citi also forecasts Indus Towers could pay dividends of Rs 11-12 per share for H2 FY25, with payouts rising to over Rs 20 per share annually in FY26 and FY27, yielding a compelling dividend of 6% at current levels.
Today’s block deal likely represents the final phase of Vodafone’s multi-year strategy to reduce its exposure to the Indian telecom market and streamline its global financial commitments. Kotak Mahindra Bank and Bank of America are reportedly acting as brokers for the share sale.
