Vodafone Group Plc (LSE:VOD) is considering selling a small portion of its 28.12% stake in Indus Towers Limited (NSEI:INDUSTOWER) to inject capital into its ailing Indian telecom joint venture, Vodafone Idea Limited (NSEI:IDEA)(Vi). This comes even as Vodafone Idea's potential global lenders are pressing the telco's co-promoters " the UK telecom major and India's Aditya Birla Management Corporation Pvt. Ltd. (Aditya Birla Group)" for some capital infusion to improve their overall comfort levels, three people with direct knowledge said.

The Vodafone Group has previously said that it would not infuse any fresh equity into Vi. But its stake in the now-listed Indus Towers is an existing and separate telecom-related investment in India, which may make it easier for the British telco to convince shareholders, if required, one of the people told ET. “With the recent closure of the Infratel-Indus merger, it is definitely an available option to demonstrate the UK co-promoter's commitment to Vi,” said another person, a senior banker familiar with the discussions.

A person close to Vi's potential foreign lenders said formalising the final funding terms, leading to a binding term sheet, is expected next month, but the timeline also depends on how soon one or both promoters signal intent to infuse funds into the cashstrapped Indian telco. Investment firm Oak Hill Advisors is believed to be leading a consortium including GoldenTree Asset Management, Pacific Investment Management Co, Sixth Street, Twin Point Capital and Varde Partners to provide an around $2 billion (INR 146.00 Billion) credit line to Vi. They are expected to invest through a mix of convertible instruments, comprising bonds and warrants with a linked equity option that will allow them to convert a portion of the debt into shares.

Vodafone Group and Oak Hill spokespersons declined to comment on the matter, while the Aditya Birla Group, Vodafone Idea and the potential investors did not respond to ET's queries till press time 20 January 2021. Indus Towers also declined to comment. The Vodafone Group is believed to be mulling selling only a small part of its holdings in Indus, but is yet to take any firm decision on how much.

“It will first need to take its UK shareholders on board before signalling any such intent,” said a person. “While some stake divestment in Indus is possible, the Vodafone Group may first need to get the share pledges released by clearing underlying liabilities,” one of the people said.