To compete with Reliance Jio, Bharti Airtel to build Rs 32,000 crore war chest

By: |
Published: March 1, 2019 5:45:59 AM

Bharti Airtel just about managed to stay in the black with a small profit of Rs 86 crore, on the back of an exceptional gain of Rs 1,017 crore in three months of October-December 2018.

Bharti said the company’s board of directors has considered the recommendations of the special committee of directors for fund-raising and thereby approved the same.

Bharti Airtel has finalised a fund-raising plan of up to Rs 32,000 crore through a combination of Rs 25,000-crore rights issue and a Rs 7,000-crore perpetual bonds float to build a war chest to reduce debt and increase 4G network coverage to compete with Reliance Jio.

In a stock exchange filing on Thursday, Bharti said the company’s board of directors has considered the recommendations of the special committee of directors for fund-raising and thereby approved the same. “The board approved the issuance of fully paid-up equity shares of the company for an amount aggregating up to Rs 25,000 crore by way of a rights issue to eligible equity shareholders of the company as on the record date (to be notified subsequently),” the firm said in its filing.

It added: “And perpetual bond of up to $1 billion (Rs 7,000 crore) denominated in foreign currency subject to price, market conditions and other terms and conditions as acceptable, and with conditions allowing for full accounting equity credit and subject to all applicable laws including under ECB Regulations,” the company said in a stock exchange filing.

The company’s rights issue price has been set at Rs 220 per fully paid equity share, which is at a near 31% discount to the Thursday’s closing price of Rs 317.95, on BSE, which was down 0.63%. The fundraise plan was announced after close of trading hours.

The rights entitlement ratio for the issue will be to the tune of 9 shares for every 67 shares held by eligible shareholders as on the record date.

The company’s board on Thursday further authorised the special committee to proceed with rights issue and decide the other terms and conditions, including setting the record date, appointment of intermediaries, finalisation of the letter of offer and other related matters; and also authorised the committee of directors to decide, assess and conclude on the issuance of the perpetual bond under such terms and conditions as may be deemed fit.

Bharti Airtel just about managed to stay in the black with a small profit of Rs 86 crore, on the back of an exceptional gain of Rs 1,017 crore in three months of October-December 2018.

On February 5, ratings firm Moody’s had downgraded senior unsecured rating for Bharti as well as the backed senior unsecured notes issued by Bharti’s wholly- owned subsidiary, Bharti Airtel Int’l (Netherlands) BV The ratings firm had assigned a Ba1 corporate family rating (CFR) to Bharti and withdrawn the company’s Baa3 issuer rating, while keeping the ratings outlook negative.

In the last almost two years, Bharti has been reducing its stake in its listed tower company, Bharti Infratel to reduce debt and take on competition. The company has raised over Rs 12,000 crore through these stake dilutions. Last December, Bharti decided to further sell 32% stake in Infratel, valued at close to Rs 15,500 crore to build its capex spends for 4G expansions.
In November, Bharti’s Africa arm raised $1.25 billion through a placement of shares to six global investors, including Warburg Pincus, Temasek, Singtel and SoftBank Group International, amidst its plans to list its African arm by June 2019. Recently, the company also raised $200 million from Qatar Investment Authority (QIA).

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Switch to Hindi Edition