Telecom stocks plummet as Airtel declares that it is "not in any discussion" of purchasing Vodafone UK's Indus Towers stake

Telecom stocks plummet as Airtel declares that it is "not in any discussion" of purchasing Vodafone UK's Indus Towers stake

On April 24, Bharti Airtel refuted claims that the telecom giant was considering acquiring a majority position in the towers firm and said that it is not in discussions to purchase Vodafone UK's investment in Indus Towers.

Bharti Airtel had 129.2 crore shares, or 47.95 percent, in Indus Towers as of March 31, 2024. Promoters owned 69% of the company overall.

On April 24, when Bharti Airtel refuted rumors that it was in discussions to acquire Vodafone Group's interest in Indus Towers, shares of telecom firms Indus Towers Ltd. and Vodafone Idea dropped as much as 8%.

The telecom said in a regulatory filing that it has no intention of increasing its ownership beyond what was necessary for Indus Towers to financially consolidate within the business.

A media source said that Bharti Airtel was negotiating to purchase Vodafone Group, a UK-based company, for 21.05 percent of Indus Towers, possibly gaining control of the company. According to the article, which cited unidentified sources, if the acquisition goes through, the British carrier may inject part of the earnings into Vodafone Idea, its indebted Indian division.

"The company has no desire to raise its stake beyond what needs to be implemented for financial consolidation of Indus in the Company, such shall be done as and when appropriate under compliance of applicable disclosure requirements," said Bharti Airtel.

With a 47.95 percent stake, billionaire Sunil Mittal's Airtel is the biggest stakeholder in Indus Towers.

"Airtel is primarily dependent on Indus to provide vital infrastructure services to the telecommunications sector. As a result, Airtel will always make sure that Indus maintains good health and financial stability, the company informed exchanges.

The Indus Towers share dropped more than 3% as a result of the event, reaching an intraday low of Rs 348 on the National Stock Exchange (NSE). Vodafone Idea fell as much as 8%, reaching a low of Rs 13.25. Trading for Bharti Airtel remained flat.

Bharti Airtel had 129.2 crore shares, or 47.95 percent, in Indus Towers as of March 31, 2024. Promoters owned 69% of the company overall.

According to a recent analysis by Nuvama Institutional Equities, the company has changed its outlook for the telecom industry and now thinks that price increases together with government assistance would improve the operators' financial standing and return profiles.

Nuvama increased its target price for their sectoral choice, Bharti Airtel. Additionally, it upgraded Vodafone Idea's shares to a "hold" rating and increased its price target.