Airtel will soon have a Rs 15,000-cr war chest to fund its Jio fight

Bharti Airtel plans to raise Rs 12,000-15,000 crore through issue of fresh shares in the current fiscal year as part of its strategy to create a war chest of about Rs 30,000 crore in three tranches to reduce debt and financing costs, bolster cash flows and meet capital expenditure to fight the price war unleashed by Reliance Jio Infocomm.The company is examining the option of either a rights issue to existing shareholders or private placement to institutional investors and promoters, two persons familiar with the development told ET.The bulk of the proceeds will be used to repay debt and bring down borrowing costs.Bharti Airtel has net consolidated debt of Rs 1,14,557 crore, of which the Indian operations’ borrowings amount to about Rs 80,000 crore. This amount includes outstanding spectrum payments of nearly Rs 46,000 crore.By financial year 2020, the group’s debt is expected to come down significantly, with the international business having residual debt of about $2.5 billion (approximately Rs 17,500 crore), said one of the persons. 66837472 Stake Sale in Tower BusinessBharti Airtel had announced that Airtel Africa Ltd, its UK-incorporated subsidiary, intends to launch an initial public offering in mid-2019 on an international stock exchange. The IPO aims to raise $1.25-1.5 billion and the funds would be used to reduce the debt of the African subsidiary, said the second person.The third round of fundraising will be done through equity dilution in Bharti Infratel, which is in the midst of a merger with Indus Towers.After the merger, Bharti Airtel will hold up to 37.2 per cent stake in Bharti Infratel, which will own more than 163,000 towers across India. Depending on market conditions, Bharti Airtel will dilute its stake in the tower business in the latter half of 2019, sources said.The Bharti Group declined to comment on the possibility of fresh equity infusion in the listed company. It said it had already made announcements regarding the proposed plan for an IPO of Airtel Africa sometime in June 2019, and that information regarding the merger of Bharti Infratel and Indus Towers was already in the public domain. “Beyond this, we have no comments to offer,” said the Bharti spokesperson.In October this year, Airtel Africa raised $1.25 billion from six leading global investors comprising Warburg Pincus, Temasek, Singtel, SoftBank Group and others through fresh issue of equity shares at an enterprise value of $9.4 billion. Airtel Africa, which has seen a turnaround in fortune in recent years, has announced it would use the proceeds to reduce existing debt of about $5 billion and for expanding operations. In 2010, Bharti Airtel had acquired the African business of Kuwait-based Zain Telecom for an enterprise valuation of $10.7 billion. Last year, Bharti raised $2 billion through the sale of its African tower assets and $1 billion from the sale of its businesses in Burkina Faso and Sierra Leone.

from Economic Times https://ift.tt/2FI1a1q