Vodafone Idea, Indus Towers shares jumped up to 5% in fag-end trade today; here's why

Shares of Vodafone Idea Ltd (VIL) and Indus Towers Ltd saw a decent uptick as Wednesday's trading session approached closure. VIL stock surged 5 per cent to hit an intraday high of Rs 8.62. It eventually settled 2.44 per cent up at Rs 8.41. Indus Towers, on its part, rose 2.19 per cent to hit a high of Rs 361.35. The scrip finally closed with 1.46 per cent gains at Rs 358.75.

Today's spike in the share prices of both companies from the domestic telecom sector came after UK-based Vodafone Group Plc said it would sell its remaining 3 per cent stake in India's Indus Towers.

"Vodafone Group Plc (Vodafone) announces that it has launched a placing of its remaining 79.2 million shares in Indus Towers Ltd representing 3 per cent of Indus' outstanding share capital through an accelerated book build offering (the placing). The proceeds from the placing will be used firstly to repay Vodafone's outstanding borrowings of c.US$101 million to Vodafone's existing lenders, secured against Vodafone's Indian assets," the British telecom group stated in an exchange filing.

"Under the terms of the security arrangements entered into between Vodafone and Indus (the Security Arrangements), Indus has a security over the residual proceeds from the placing to guarantee obligations from Vodafone Idea Ltd to Indus under the Master Services Agreements (MSAs)," it also said.

"As permitted under the Security Arrangements, Vodafone intends to contribute the residual proceeds from the placing (after repayment of Vodafone's outstanding borrowings) towards an issue of new equity shares by Voda Idea (a Capital Raise) once the terms of such a Capital Raise have been evaluated and decided on by the Board of Directors of Voda Idea. The proceeds from the Capital Raise would be used by Voda Idea to pay outstanding MSA dues to Indus," the UK-based Vodafone added.

"Following the repayment of Vodafone's outstanding borrowings, if any Indus Shares remain, such Indus Shares and any proceeds which are not used by Vodafone to subscribe to new shares in Voda Idea would be available to Indus to guarantee Voda Idea's obligations under the MSAs. A further announcement will be made when appropriate," it further stated.

Voda Idea is currently involved in the process of rolling out its 5G services in select areas. The company was formed in 2018 when Vodafone Group merged its India business with Idea Cellular.

Meanwhile, Indian equity benchmarks today continued their upward move for the fourth consecutive session, led by gains in banks and financials. Broader indices (mid- and small-cap shares) also settled on a positive note.