Airtel to raise Rs.16,500 crore as telecom fight gets fierce

The Board of Bharti Airtel on Monday approved plans to raise Rs 16,500 crore through non-convertible debentures (NCDs) and foreign currency bonds. The development assumes importance in the wake of intense competition in the telecom sector triggered by the entry of a new player Reliance Jio. Earlier this year, the third largest player Idea Cellular, which is set for a merger with Vodafone, had raised Rs 6,750 crore.

“Subject to approval of shareholders and other requisite approvals, the Board of directors in its meeting held today (Monday) has approved the issuance of NCDs of up to Rs 10,000 crore on a private placement basis in such tranches/series and at such rates as may be approved from time to time on a cumulative basis along with all NCDs issued by the company and the issuance of foreign currency bonds up to a limit of $1 billion (Rs 6,482 crore) or equivalent in one or more tranches,” Bharti Airtel said in a regulatory filing to the BSE.

“Any funds raised from issuance of aforesaid debt securities shall be used for routine treasury activities, including refinancing of existing debt and spectrum liabilities,” the filing said.

The company will now approach shareholders for final approval of the proposed funds. As on December 31, 2017, the company’s consolidated net debt stood at Rs 91,714 crore.

The earlier shareholders’ nod to raise NCDs up to Rs 10,000 crore is valid till March 12, 2018, which is why the company plans to take a fresh approval from shareholders, according to the BSE filing.

Earlier, Bharti Airtel raised funds from its tower subsidiary Bharti Infratel. Through various transactions of stake sale in the subsidiary, it had raised Rs 12,089 crore. Singapore Telecommunications (SingTel), the largest shareholder in Bharti Airtel, also recently announced an investment Rs 2,649 crore in the company. Bharti Airtel had recently increased its capital expenditure guidance for this fiscal to Rs 25,000 crore from Rs 20,000 crore earlier.

Bharti Airtel, the largest telecom player, has also been impacted by the onslaught of competition where the industry saw dirt cheap tariffs with voice calls free for lifetime.

The government recently announced a relaxation in the time period for payment of spectrum dues and enhanced spectrum caps for telecom service providers, which will fasten merger and acquisitions in the sector. However, analysts said this will bring in only a short-term relief to the industry reeling under financial stress.

Source: DNA Money