Vodafone Idea has demerged its fibre infrastructure business by transferring such assets to a wholly-owned unit, Vodafone Towers Ltd (VTL).
The move sets the stage for an early sale of Vodafone Idea’s fibre assets as the telecom market leader urgently needs to bring in cash to counter brutal competition from Reliance Jio and Bharti Airtel.
Vodafone Idea’s board of directors has approved “an arrangement for transfer of the company’s fibre infrastructure undertaking to its wholly-owned subsidiary, VTL,” the company said in a regulatory filing on Bombay Stock Exchange Thursday.
VIL shares closed 0.40% lower at Rs 37.75 on BSE.
Vodafone Idea has 1,56,000 km of fibre network assets — bulk of it on inter-city routes – that is used for backhaul capacity.
Earlier this month, Vodafone Idea had announced plans to monetise its fibre assets – estimated to be worth roughly $430-450 million — alongside plans to arrange a Rs 25,000 crore equity fund-raise to bolster its balance sheet and meet future capex needs to boost 4G coverage in its efforts to catch up with Jio and Airtel.
Vodafone Idea said “the rationale for the demerger” is to sharpen focus on fibre infrastructure business to achieve greater infrastructure sharing, operational efficiencies and cost optimisation,” which would result in delivery of more “affordable telecom services”.
ET had reported in its November 28 edition about VIL transferring its fibre assets to a wholly-owned arm. In its November 16 edition, the paper had reported, citing analysts, that tower company Bharti Infratel is a likely frontrunner to buy VIL’s fibre assets, especially since fiberised towers can boost the 4G experience amid surging demand for data services.
Source: Economic Times