Bharti Airtel looks to raise $4 billion to pay AGR dues, board to meet on December 4

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Published: November 30, 2019 3:09:58 AM

Company board to meet on December 4 to explore measures to raise funds.

airtel, bharti airtelOn November 22, Bharti Airtel filed its review petition in the SC seeking waiver of interest, penalty and interest on penalty, which comprises around 75% of the due amount.

Even as it awaits the fate of its limited review petition seeking some relief from paying its `35,586-crore adjusted gross revenue (AGR) dues by January 24, 2020, Bharti Airtel has initiated the process to raise the requisite funds.

The company’s board will meet on December 4 to consider raising the funds, a Bharti Airtel statement said on Friday. Though the statement did not mention the amount, sources indicated that it could be in the range
of $3-4 billion (Rs 22,000-28,000 crore).

On November 14, while declaring its July-September quarter results, Bharti had provisioned around Rs 28,000 crore towards its AGR-related dues arising out of the Supreme Court’s October 24 order which upheld the department of telecommunications’ methodology of computing AGR for payment of licence fees and spectrum usage charges.

The company posted its biggest consolidated net loss at Rs 23,045 crore for the July-September quarter as a result of this provisioning.

“…a meeting of the board of directors of the company is scheduled to be held on Wednesday, December 4, 2019 , inter-alia, consider and evaluate any and all proposals for raising of funds either by issuance of equity shares, and or bonds including foreign currency convertible bonds,” the company said in a regulatory filing.

The board will also evaluate raising of funds through debentures, non-convertible debt instruments along with warrants, convertible debentures, securities or any other equity based instruments including through qualified institutions placement or rights issue, or through any other permissible mode, the filing said.

On November 22, Bharti Airtel filed its review petition in the SC seeking waiver of interest, penalty and interest on penalty, which comprises around 75% of the due amount.

Analysts said that the success of the fund-raising exercise would depend much on the kind of tariff hike the company may bring about in the near term. While Bharti, along with other telecom operators, has announced that it will hike tariffs next month, it has not mentioned the quantum. It has generally been speculated that the hike will be in the range of 10-15%. If that happens, Bharti is unlikely to reach the average realisation per user levels of pre-Reliance Jio’s launch. Bharti’s Arpu in the July-September quarter was `128. In FY16, its Arpu was `194 and in FY17 it was at `158. Reliance Jio launched its services in September 2016 and the tariff war began since then.

Analysts have estimated that a 10% tariff hike will see Bharti’s Arpu rising from the current `128 to `140, a 15% hike will take it to `147 and a 20% rise to `153. This means that the company needs to make more than one round of tariff hike to reach the pre-Jio levels of Arpu which would give investors comfort.

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