Struggling telecom company Vodafone Idea may get an injection of capital from its British parent Vodafone Group Plc, which is reported to be looking at selling a portion of its stake in its mobile phone tower business.
Vodafone Group is reportedly planning to sell a 2.4% stake in Indus Towers and is in talks with “one of the largest shareholders” to sell 4.7% more. It could raise up to 43-44 billion rupees (US$571,000-$584,000) and the funds will be infused into Vodafone Idea, the Economic Times reported.
Interestingly, rival Bharti Airtel holds about a 42% stake in Indus Towers, while Vodafone Group holds 28%. Media reports say Vodafone may be in talks with Bharti Airtel to sell a 4.7% share.
If the sale is concluded, Vodafone Group would retain a 21% shareholding and it is in talks with “several interested parties” to sell the remaining stake.
In its regulatory filing at the London Stock Exchange, Vodafone Group said it was committed to strengthening Vodafone Idea’s balance sheet. This was the first time the UK telecom major had expressed an interest in participating in Vodafone Idea’s fundraising.
Earlier, both Vodafone Plc CEO Nick Read and Vodafone Idea promoter Kumar Mangalam Birla ruled out fresh funding as they feared Vodafone Idea was no longer a going concern.
In a separate development, Kumar Mangalam Birla expressed an interest in investing at least $150 million in Vodafone Idea Ltd in a personal capacity.
Vodafone Idea had a debt of 1.97 trillion rupees at the end of December and a cash balance of 15 billion rupees. It had been in talks with many private equity operators to raise about $1 billion in equity and debt funding.
In the recent third quarter, the company posted a loss of 72.34 billion rupees, up from 71.44 billion rupees in the same period last year. Vodafone Idea is also struggling to retain its subscribers and has lost nearly 67 million users since January 2020.
In January, the Vodafone Idea board approved the conversion of the full amount of interest related to spectrum auction installments and Adjusted Gross Revenue dues into equity. The conversion will therefore result in dilution to all the existing shareholders of the company, including the promoters, and the government would own 35.8% of the shares in the debt-laden company.