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ATC India requests Vodafone Idea to convert OCDs into equity shares

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In Short:

American Tower Corp’s India unit has asked Vodafone Idea to convert 14,400 debentures into 144 crore equity shares, giving it less than a 3% stake in the telco. Vi, backed by Vodafone and Aditya Birla Group, is taking steps to fulfill the conversion. This comes after ATC sold its Indian tower business to Canada’s Brookfield. Vi is aiming to raise funds to strengthen its network and launch 5G services.

ATC India Calls on Vi to Convert OCDs into Equity Shares

The India unit of American Tower Corp (ATC) has requested Vodafone Idea (Vi) to convert 14,400 optionally convertible debentures (OCDs) into 144 crore fully-paid equity shares, representing less than 3% stake in the telco.

Vi’s Response and Plans

Vodafone Idea (Vi), the telecom joint venture between UK’s Vodafone Group Plc and India’s Aditya Birla Group, stated that it is taking necessary steps to fulfill the conversion request from ATC. This comes after ATC recently sold its Indian towers business to Canada’s Brookfield.

Vi shares closed 2.35% lower at Rs 12.86 on the BSE Tuesday, with the exact stake that ATC will hold post-conversion yet to be disclosed. However, based on calculations, ATC India is expected to have around 2.9% stake in Vi.

Previous Allocations and Recent Acquisition

In February 2023, Vi had allocated OCDs worth Rs 1,600 crore to ATC’s India unit against outstanding dues, with ATC estimated to be owed around Rs 2,000 crore. ATC had initially held a 3.18% stake in Vi following that allocation.

In January 2024, Canada’s Brookfield acquired ATC’s India unit in a $2.5 billion deal, set to close in the second half of the year. ATC will still retain the economic benefits associated with the OCDs from Vi.

Fundraising and Future Plans

Vi aims to raise Rs 45,000 crore in the June quarter of FY25 through a mix of equity and debt, to strengthen its 4G network and launch 5G services to compete with bigger rivals like Reliance Jio and Bharti Airtel in key markets.

ATC is highlighted as one of Vi’s largest infrastructure service providers, with a long-term partnership in place. The conversion of OCDs at a premium to the prevailing market price of Vi shares reflects the mutual trust between the two entities.

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