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TPG, Apollo, and other private equity firms are looking to invest in the assets of Vodafone Idea, a beleaguered Indian telecom.
REUTERS/Babu/Files
Anirudh Laskar contributed to this article.
8th of July, 2021
According to two persons familiar with the situation, TPG Capital, Apollo Global, and Carlyle Group are among the private equity titans in early talks with Vodafone Idea Ltd to invest in the company’s optic fiber and data center assets valued roughly $1 billion.
The arrangements will most likely be on a sale-and-leaseback basis, the people added on the condition of anonymity, because Vodafone Idea will continue to use the optic fibre infrastructure.
“Because telecom and internet penetration is continuously rising, the fibre assets, fixed broadband, and data center companies have enormous growth potential. For PE deals, pricing will be crucial. The deals should be completed in 2-3 months, according to one of the two persons.
Vodafone Idea, which is saddled with 1.8 trillion in liabilities, including immediately payable adjusted gross revenue (AGR) dues, has so far been unable to get direct equity or hybrid financing investments.
TPG Capital, Apollo Global, and Carlyle declined to comment through their spokespeople. An email sent to Vodafone Idea went unanswered.
“India’s telecom business is expected to consolidate for the next three years,” said the first individual, “but the value of optic fiber networks, data centers, and broadband will continue and grow, regardless of who remains as the investor or owner.”
“There are also signs that the government may take efforts to put an end to the age of predatory pricing by telecom service providers. Tariffs will be raised to levels that are reasonable. The situation will improve as a result of this,” the second person stated.
Last year, Vodafone Idea said that it will raise 25,000 crore through a combination of equity and loan offerings.
“If the agreement with the PE investors goes through, the telecom will at least be able to pay the AGR and spectrum dues that are due immediately, as well as have enough working cash for the year,” said the first individual.
The debt-ridden telco announced last Friday that it is in active talks with possible investors to raise funds. Vodafone Idea has a data center in Navi Mumbai, as well as 160,000 kilometers of fiber optic cable. Its fixed-line broadband business is run by You Broadband, which it bought for 400 crore from TRG Capital in 2017. In 2019, the telecom attempted to sell its fiber assets and data center business, but negotiations fell through owing to valuation disputes.
Vodafone Idea’s top management reiterated in a call with investors that introducing a floor price will be the “best and most preferred” solution for addressing the industry’s concerns about the current low-tariff regime, which began after Reliance Jio entered the market with low-cost voice and internet data plans to attract subscribers.
Vodafone Idea has also addressed the government, requesting that a moratorium on spectrum instalments be extended and that the business be allowed to hike pricing in order for at least three significant telecom players to continue in the market for the benefit of customers.
“On fundraising, we are now in active talks with possible investors,” said Ravinder Takkar, CEO of Vodafone Idea, during an analyst call following the company’s March quarter reports.
Vodafone recently stated that it will be unable to pay the telecom department the instalment of Rs 8,292 crore due on April 9, 2022, because the company’s cash will be required to settle AGR dues.
The corporation asked a year of delay in paying the spectrum instalment, which is due in April 2022, in a letter to telecom secretary Anshu Prakash dated June 25.
Many investors, according to Vodafone Idea, are hesitant to inject money into the company because they fear that until consumer rates increase significantly, they would lose money. For the quarter ended March 31, the business recorded a consolidated loss of roughly Rs 7,023 crore.
The original version of this article appeared on livemint.com.
TPG Vodafone Apollo Global Carlyle Idea by Vodafone
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