Bharti Airtel in Talks to Acquire Vodafone's Stake in Indus Towers, Negotiations Stuck Over Valuation

Bharti Airtel, India's second-largest telecom operator, is currently engaged in discussions to acquire Vodafone Group's 21.05% stake in Indus Towers, a major telecom infrastructure company. If the acquisition goes through, it would give Airtel a controlling 69% share in Indus Towers, further strengthening its position in the Indian telecom market.

However, the negotiations between Airtel and Vodafone have hit a roadblock due to discrepancies over the valuation of the stake. Airtel is reportedly unwilling to buy the stake at Indus Towers' current share price, which has risen over 77% since January. Instead, Airtel is looking to acquire the stake at a valuation of 210-212 rupees per share, the level at which KKR and Canada Pension Plan Investment Board sold shares in Indus in February.

Why this matters: The potential acquisition could have significant implications for the Indian telecom sector. If successful, it would give Airtel greater control over the critical infrastructure of Indus Towers and potentially allow Vodafone to inject some of the proceeds into its financially strained Indian venture, Vodafone Idea.

In response to the reports, Bharti Airtel has denied being in discussions to acquire Vodafone's stake. The company stated, "Airtel is not in any discussion with Vodafone to buy its stake in Indus Towers. We have no desire to raise our stake beyond what is required for financial consolidation of Indus." Airtel emphasized that Indus Towers is a critical infrastructure provider and that it will ensure the company remains financially stable and robust.

Currently, Airtel holds a 47.95% stake in Indus Towers, while Vodafone Group holds 21.05% and the public holds 30.97%. If Airtel were to acquire Vodafone's stake, its total stake in Indus Towers would increase to 69%, giving it a controlling interest in the tower company.

The news of the potential acquisition talks caused shares of Indus Towers and Vodafone Idea to fall up to 5%. Analysts believe that if Vodafone's Indus Towers stake is sold to Airtel, it could enable Vodafone Idea to infuse some of the proceeds into its own operations, potentially marking an inflection point for the telecom sector.

Key Takeaways

• Airtel in talks to acquire Vodafone's 21.05% stake in Indus Towers.
• Acquisition would give Airtel a 69% controlling stake in Indus Towers.
• Negotiations hit roadblock over valuation, Airtel wants lower price.
• Acquisition could enable Vodafone Idea to invest proceeds into its operations.
• Airtel denies being in discussions to acquire Vodafone's Indus Towers stake.