India's Vodafone Idea and Bharti Airtel seek financial infusions

India's Vodafone Idea and Bharti Airtel seek financial infusions

Indian operator Bharti Airtel has bought from the UK’s Vodafone Group a 4.7% stake in Indus Towers, paying Rs2,388 crore for the stake – that’s about US$315.8 million. Airtel now owns 46.43% of Indus. Vodafone’s stake is now 21%, though it reportedly plans to sell this too.

The deal obliges Vodafone to invest the proceeds of the sale into Indian operator Vodafone Idea (aka Vi), which will use the money to clear its payment arrears to the tower company.

Of course, Vodafone Idea has a number of financial problems at the moment, hence this deal and others aimed at infusing capital into the loss-making company. In fact last week saw shareholders of Vodafone Idea approve a proposal to raise Rs14,500 crore in total (a staggering $1.9 billion).

India’s Economic Times news service says that Vodafone Idea had placed a special resolution of issue of equity shares worth Rs4,500 crore (about US$595.2 million) to the group firms of promoters the Vodafone Group and the Aditya Birla Group for transaction at an extraordinary general meeting.

The Vodafone Group’s investment of Rs3,375 crore (US$446.35 million), will be paid from the funds raised by the partial sale of its stake in Indus Towers (presumably including an earlier sale of 2.4% in Indus via a block deal to undisclosed investors).

As part of its fundraising Vodafone Idea had also sought, and gained, shareholders' approval to raise Rs10,000 crore (about US$1.322 billion) through sale of equity and/or through a mix of depository receipts and foreign currency convertible bonds.

Meanwhile Bharti Airtel is also planning a fundraising spree. According to the Economic Times, it has told analysts it may sell stakes in mobile financial services business Airtel Payments Bank, data centre provider Nxtra, Bangladesh operator Robi Axiata and Indus Towers.

The company noted that it is committed to increasing its stake in Indus at the moment but said that it planned to “look at opportunities for monetising this vital asset at an appropriate time”.

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