For Indus Towers, a large block deal is anticipated: FIIs will sell shares valued at Rs 270 crore.

Mumbai, May 20, 2024 Significant development is expected for Indus Towers, India’s largest mobile tower installation company, as a major block deal is expected to take place tomorrow, May 21. CNBC Awaaz quoted sources as saying that foreign institutional investors (FIIs) can sell shares worth Rs 270 crore through this block deal, which is equivalent to 80 lakh shares. Kotak Securities has been said to be the deal broker.

Historical context of block deals

Indus Towers has seen substantial block deals in the past. It is noteworthy that on February 1, 2014, a large block deal involved the sale of 24.7 crore shares, representing 9.2 per cent stake in the company, which was valued at Rs 5,229 crore. The identities of the buyers and sellers were not disclosed at that time.

Recently, Moneycontrol reports on January 31 suggested that US private equity firm KKR and Canada Pension Plan Investment Board (CPPIB) were considering an exit from Indus Towers. They were reportedly planning to put their $465 million stake in a block deal bid.

Impact on stock market and business

Both BSE and NSE are closed today in view of the Lok Sabha elections in Maharashtra. However, Indus Towers shares are expected to reflect the impact of this block deal once the market reopens. In a special trading session on Saturday, May 18, shares of Indus Towers closed at Rs 344.75 on the BSE, up 0.09 per cent, and at Rs 344.50 on the NSE, up 0.01 per cent.

Expected financial improvement from Vodafone Idea

Indus Towers also hopes to recover dues from Vodafone Idea (Vi). During the release of Q4FY24 results on May 1, a senior official said Indus Towers is in discussions with Vi and expects repayment of dues soon. Vi recently raised Rs 18,000 crore through a follow-on public offer (FPO), which is expected to help clear its dues. Citi Research has estimated that Vi’s total outstanding on Indus Towers could be around Rs 5,700 crore.

Industry view on duty hike

In related industry news, Gopal Vittal, managing director and chief executive of Bharti Airtel, has called for a substantial tariff hike, calling the current tariffs “absurdly low”. Vittal suggested that multiple rounds of growth are required to increase the average revenue per user (ARPU) from the current Rs 200 to Rs 300. He said that even at Rs 300, the ARPU would be the lowest globally.

conclusion

Tomorrow’s expected block deal is set to be a significant event for Indus Towers, potentially impacting its stock performance and financial strategies. As the company navigates these developments and anticipates recovery of dues from Vodafone Idea, the telecom industry is grappling with the need for tariff adjustments to ensure financial sustainability.