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Voda-Idea in talks with Brookfield, Edelweiss to sell assets: Sources; telco denies

In a clarification to the stock exchange on Wednesday, Vodafone Idea however denied that it was in talks with the two companies.

Dec 11, 2019, 07.22 PM IST
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Vodafone Idea reported a record loss of Rs 50,921 crore in the quarter ended September after providing for payment of AGR dues.
MUMBAI/NEW DELHI: Vodafone Idea is said to be in talks to sell its optic fibre business to Brookfield Asset Management Inc. and its data centre to the Edelweiss Group as the telco seeks to raise over $2.5 billion from asset sales ahead of a January deadline to pay statutory dues.

In a clarification to the stock exchange on Wednesday, Vodafone Idea however denied that it was in talks with the two companies.

"The fact that the Company intends to monetize its optic fibre business and data centre was disclosed in the quarterly report sent to the Stock Exchanges on 14 November 2019. We deny that any such negotiations are taking place with Brookfields or Edelweiss," the company said.

The stock exchanges had sought a clarification from the carrier whose stock surged nearly 8% intraday, before closing 2% higher at Rs6.69 on the BSE Wednesday.
Vodafone Idea didn't answer ET's detailed queries sent on Tuesday.

A person directly involved told ET that the telco "is in talks with global asset manager Brookfield to sell its 156,000 km of optic fibre assets and Bank of America and Morgan Stanley are the bankers helping Vodafone negotiate with potential buyers”. There are a few others players, who are also in talks as well.

For its data centre located in Navi Mumbai, the company is said to be negotiating with the Edelweiss Group, a diversified financial services company, another person said.

“Edelweiss may own such assets through one of its alternative investment funds – Edelweiss Yield Plus Fund,” a person aware of the discussions between the two sides told ET.

“Negotiations for the optic fibre network and data centre are currently under way,” said a senior banker familiar with the plans.

Brookfield and Morgan Stanley declined to comment on the matter. Bank of America and Edelweiss did not respond to ET’s queries.

The fibre network business is valued at $1.5 billion-$2 billion, while the data centre should fetch $60 million to $100 million, bankers told ET.

Vodafone Idea is staring at paying up over Rs 53,000 crore ($7.5 billion) after the Supreme Court upheld the government’s definition of adjusted gross revenue (AGR) for telcos to include revenue from non-core activities. The telcos have sought a review of the October 24 order, which stated that the dues should be cleared within three months.

“What the company receives from the sale of assets will determine the balance that it may need to raise from the capital markets to pay off the AGR dues and capex needs,” said a person with knowledge of the company’s plans.

Bankers said it would be a challenge to sell the company’s optic fibre assets considering that the sector is burdened with over Rs 7 lakh crore of debt.

“We agree valuation would be a challenge. Given the state of the telecom industry, this isn’t the best time to sell the fibre and this will impact valuation. However, efforts are being made to assess how much money it could fetch,” said an executive involved in the matter.

Vodafone Idea has appointed bankers to assess the incremental funds needed to meet the AGR dues and its capital expenditure plans.

“Separate bankers are working out the quantum for which the company would need to hit the capital markets taking the sale proceeds into account,” a senior company executive told ET, adding that presentations on fund-raising avenues were being made.

Vodafone Idea also plans to monetise it 11.5% stake in the tower entity to be formed through the merger of Bharti Infratel and Indus Towers, valued at $500 million-$700 million. The deadline for completion of the proposed merger was extended by 60 days to December 24 after it failed to get government approvals on time.

Last week, the government warned all telecom licence holders against delaying payment of AGR-related dues and asked them to clear their doubts by December 13, ET reported in its December 10 edition.

Vodafone Idea reported a record loss of Rs 50,921 crore in the quarter ended September after providing for payment of AGR dues.
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