In what may lead to a major deleveraging exercise, Bharti Airtel on Tuesday said it has received a recommendation from its committee of directors to sell its controlling stake in its tower arm Bharti Infratel to a clutch of global investors.
In what may lead to a major deleveraging exercise, Bharti Airtel on Tuesday said it has received a recommendation from its committee of directors to sell its controlling stake in its tower arm Bharti Infratel to a clutch of global investors. Bharti Airtel, which currently holds 58% stake in Infratel, said it has been approached by a few reputed global investors for acquiring controlling stake in Infratel and since the CoD has recommended that the proposal be considered, the board will evaluate the offers. Going by the market cap of around Rs 82,000 crore of Bharti Infratel on Tuesday, a 51% stake sale in the company will yield Bharti Airtel around Rs 40,000 crore. The net debt of Bharti Airtel which currently stands at Rs 91,480 crore can thus be brought down to around Rs 50,000 crore, bringing the company’s net debt to Ebitda to 1.50 from the current 2.95. The Bharti Infratel board had on Monday said it is looking at acquiring majority stake in the tower firm Indus Towers in which Bharti Airtel is in partnership with Vodafone and Idea Cellular.
The larger plan is that once Bharti Infratel acquired Indus, the clutch of PE players would acquire Infratel and Bharti would exit the tower business and use the funds to pare its debt and expand its Volte network across the country. Meanwhile, on Tuesday Bharti Airtel posted strong and resilient numbers in its July-September earnings, which is seasonally a weak quarter for telecom operators. Though the company’s net profit during the period missed Bloomberg consensus estimates, it was ahead of estimates on the revenue and Ebitda front. Net profit at Rs 343 crore was down 7% sequentially. Total revenues at Rs 21,777 crore was down 0.82% compared to the preceding quarter while Ebitda at Rs 8,003 crore was 2.3% up on a sequential basis.
The competitive pressures unleashed by rival and new entrant Reliance Jio is quite visible on Bharti’s performance as the quarter saw the company post its smallest profit in 19 quarters and 6th consecutive drop in quarterly profit. On operating metrics, the company’s volumes in voice traffic increased 3.6% quarter on quarter to 437.1 billion minutes while minutes of usage per customer increased 2.2% sequentially to 518 minutes. On the data front, total traffic increased 66% sequentially to 784 billion MB and data usage per customer increased 57% to 4087 Mbs.
The average revenue per user (Arpu) at Rs 145 was down 6.3% sequentially but in line with estimates. During the quarter Bharti stopped giving the break up of voice and data Arpu and realisations since it has started offering large number of bundled packages which makes such divisions meaningless. On the Africa front, revenue increased 7.2% to Rs 5,203 crore and Ebitda jumped 23.7% to Rs 1,684.1 crore while margin expanded 430 basis points at 32.3% compared to the previous quarter.