Shares of Indus Towers worth Rs 2,802 crore were sold in a block deal on December 5, with UK's Vodafone Group Plc being the likely seller in the transaction. As much as 8 crore shares, making up an 3 percent stake in the telecom equipment company changed hands on the exchanges at an average price of Rs 354 per share.

Shares of the telecom equipment company soared 5 percent in opening trade following the block deal. At 09.17 am, shares of Indus Towers were trading at Rs 365.40 on the NSE. Over the past year, the stock has surged by more than 95 percent, boosting its current market capitalisation to over Rs 96,000 crore.

While the parties involved in the transaction were not disclosed, the deal comes a day after UK’s Vodafone Group Plc announced that it would sell its remaining 3 percent stake in Indus Towers, marking a complete exit from the Indian towers firm. The stake was supposed to be sold through an accelerated book build offering, with proceeds primarily aimed at repaying debt.

Vodafone’s decision to sell its stake in Indus Towers has been driven by persistent 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 full repayment of borrowings that were initially raised to support Vodafone Idea’s rights issue. This left the UK-based telecom giant with limited options but to divest its holdings in Indus Towers.

The latest transaction marks the completion of Vodafone’s phased exit from Indus Towers. In June 2024, Vodafone sold an 18 percent stake in the company, raising Rs 15,300 crore. The proceeds from that sale were used to substantially repay its existing lenders in relation to outstanding loans secured against Vodafone’s Indian assets.

Following that sale, Vodafone’s holding in Indus Towers was reduced to 3 percent, paving the way for the final divestment in today’s block deal. Bharti Airtel, the other promoter entity of Indus Towers, holds a 50 percent stake in the company, making it the largest shareholder. Airtel had previously increased its stake in Indus Towers during Vodafone’s earlier divestments.

Proceeds from the block deal are expected to be primarily used to repay $101 million in borrowings secured against Vodafone’s Indian assets. Residual funds of Rs 1,900-2,000 crore are likely to be infused into Vodafone Idea Ltd (Vi) as equity, said brokerage firm Citi. This equity infusion would help Vi clear its outstanding dues to Indus Towers under their Master Services Agreements (MSAs).

Citi has a ‘buy’ rating on Indus Towers shares, with a target price of Rs 458. The brokerage said that residual funds from Vodafone’s exit could translate to Rs 7 per share in additional payouts to shareholders. Citi estimates Indus Towers could pay dividends of Rs 11-12 per share for H2 FY25, rising to over Rs 20 per share annually in FY26 and FY27, offering a compelling dividend yield of 6 percent at current levels.

Today’s block deal may have been the final stage of a multi-year effort by Vodafone to streamline its exposure to the Indian telecom market and its own global financial commitments. Kotak Mahindra Bank and Bank of America are reportedly acting as brokers for the share sale, according to earlier reports.

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