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.

EU reportedly set to approve TIM/Vodafone tower JV

After announcing their intention to merge their tower businesses last July, TIM and Vodafone have had to wait nine months for the EU to give it a look.

While there had been no formal announcement at time of writing, Reuters spoke to some people who reckon the European  Commission is about to green-light the move. The mergers of the telecoms tower businesses of the two operators would apparently create Europe’s biggest mobile tower company, so antitrust authorities were bound to take an interest.

Presumably the activities of competing tower giants such as Cellnex reassured the EC that even such a major bit of M&A wouldn’t damage competition. Furthermore the whole European tower scene seems to be stampeding towards consolidation, so this presumably won’t be the last such case it has to scrutinise.

The combined tower holdings will be run by INWIT, the tower company TIM is currently the 60% owner of. After the €10 billion merger TIM and Vodafone will each own a 37.5% stake in INWIT, with equal governance rights.

Antitrust authorities will presumably only start thinking about blocking this sort of M&A when it gives one company to great a share of the mobile towers in a single country. TIM is not international, but Vodafone is an MNO in the Italian market. The report says they offered to give rival, presumably Italian, operators access to their towers as a condition for the deal being approved.