Keeping telco alive immediate priority: Aditya Birla Group not planning to buy shares of Vodafone Idea from co-promoter

The Aditya Birla Group (ABG) has no plans to exercise its option under an existing shareholder pact to buy shares of from co-promoter, the UK’s Vodafone Group, and increase its 27.66% stake, two people aware of the matter said.

Under the pact, ABG has the option to buy additional shares at Rs 130 apiece from Vodafone Group to raise its holding in Vi to 35.5% within three years of the closure of the merger between Vodafone India and Idea Cellular, which took place August 31, 2018. It can also buy the shares at the prevailing Vi stock price in the fourth year of the merger closing, under an agreed equalisation formula.

If equalisation of stakes doesn’t happen even in four years, the UK telecom major can sell its holdings to reach ABG’s level from the start of the fifth year to the 10th. Vodafone holds 44.39% of Vi.

“The option exists, but ABG’s immediate priority is not boosting its ownership but keeping Vi alive by quickly closing the pending fundraise to beef up the telco’s 4G operations and equipping it to fight financially-stronger adversaries–Reliance Jio and ,” one of the persons cited told ET.

The carrier has been trying to raise Rs25,000 crore through a mix of debt and equity for the past 10 months, but hasn’t been able to seal a deal so far.

“Though there is no change in the equalisation mechanism announced in March 2017, there have been no conversations at the co-promoters level around ABG buying the additional stake from Vodafone,” said the person.

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Another person said that if ABG had surplus cash to buy Vodafone Group’s stake in Vi, it would rather have invested in the telco to help revive it. Both ABG and Vodafone Group have maintained that they would not be infusing fresh equity in Vodafone Idea, despite the telco needing immediate funding.

The Aditya Birla Group, Vodafone and Vi did not respond to ET’s queries.

Vi’s shares slipped 0.48% to close at Rs 8.37 on the BSE Wednesday, giving it a market cap of Rs 24,051.52 crore. The Vi stock had started trading at Rs49.50 after the merger. But losses every quarter since then, debt ballooning to Rs1.8 lakh crore and rapid subscriber losses and revenue market share erosion have pushed the stock down to single digits.



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