Vodafone and TIM both flog a bunch of INWIT shares to pay off debt

Less than a month after completing the merger of their towers businesses, Vodafone and TIM have sold an equal chunk of it each to raise some cash.

The merger was finalised late last month, giving Vodafone and TIM 37.5% of INWIT (Infrastrutture Wireless Italiane) each. They have now both placed 41.7 million shares, which equates to 4.3% of the total, at €9.60 per share. This will raise around €400 million for each telco group, which they are both saying will be used to ‘reduce leverage’ – i.e. pay down some debt.

Each operator group now owns 33.2% of INWIT and the two of them issued almost identical announcements, showing how tightly coordinated this move was. The fact that it comes so soon after the merger itself strongly implies the share placement was all part of the grand plan. Furthermore, at these prices, the tow of them have room to raise a few hundred million more euros if they still feel strapped for cash.

While TIM is still reeling from the cost of the last Italian spectrum auction, the nature of the Indian market means it maybe Vodafone that feels in need of fresh funds the soonest. The company announced yesterday that it has channelled $200 million into Vodafone Idea, despite the amount not being due until September.

“Vodafone Group has accelerated this payment to provide Vodafone Idea with liquidity to manage its operations, and to support the approximately 300 million Indian citizens who are Vodafone Idea customers as well as the thousands of Vodafone Idea employees during this phase of emergency health measures, taken as a result of the COVID-19 pandemic,” said the announcement.

Vodafone Idea owes the Indian government a ton of cash and it remains unclear whether it will be able to pay. In the meantime, thanks to the recent dominance of Reliance Jio, the cashflow situation at Vodafone Idea remains dicey, so Vodafone Group is presumably grateful for any extra cash injections.