Bharti Airtel plans fundraising of $3 billion via stake sale and debt

The board of telecom major Bharti Airtel on Wednesday approved a plan to raise $3 billion via Qualified Institution Placements (QIPs), stake sale, as well as by debt, to pay its adjusted gross revenue (AGR) dues worth Rs43,000 crore to the government by Jan.24.

In a stock exchange filing, the company said that it will launch one or more QIPs, or offer for sale of equity shares, or a combination of similar offers to raise $2 billion. The balance $1 billion would be raised through debentures and bonds.

The Airtel board has authorised the Special Committee of Directors for taking necessary steps for implementing the fundraising plans.

“One or more Qualified InstitutionS Placements for an aggregate amount of $2 billion, issuance of unsecured and/or secured, listed and/or unlisted, Foreign Currency Convertible Bonds (FCCBs) in one or more tranches for an aggregate amount upto $1 billion (equivalent currency) on private placement basis or otherwise and issuance of unsecured and/or secured, listed and/or unlisted, redeemable non-convertible debentures for an aggregate amount upto $1 billion private placement basis or otherwise. Apart from $2 billion, the overall issuance for now shall be upto $1 billion, thereby totaling to $3 billion,” the Airtel filing said.

India’s top telecom player needs cash to meet its statutory dues. Airtel had reported a net loss of Rs23,044 crore for the quarter ended Sept.30, on account of a Rs 28,450 crore provisioning towards its AGR dues.

The company had provided Rs28,450 crore as a charge for the quarter, consisting of the principal (Rs6,164 crore), interest (Rs12,219 crore), penalty (Rs3,760 crore) and interest on penalty (Rs 6,307 crore).

On Tuesday, Airtel hiked the prices of its prepaid plans by 10-40 per cent. The company said that it has increased tariff in the range of 50 paise per day to Rs2.85. Airtel’s popular bundled plans offering unlimited calling and data, that were earlier priced at Rs249 (28 days validity) and Rs448 (82 days validity), will now cost Rs298 and Rs598 (84 days validity), respectively.

The announcement of this tariff hike came right after Vodafone Idea announced a hike in prepaid tariffs on Sunday.

The Airtel stock closed higher on Wednesday at Rs460.85 a share, up Rs1.90, or by 0.41 per cent, over its previous close on the BSE. The company will consider various options before it to raise the funds and how much. Analysts said it will be a mix of equity and debt finance and could be to the tune of Rs35,000 crore through these tools. The telco is tight lipped about its plans other than just informing the exchange about the board meet to raise funds.

Street buzz is that it may go for up to 10 per cent equity dilution as debt financing could put pressure on its already Rs1 lakh crore and above debt. Airtel owes about Rs 43,000 crore in dues to DoT on account of spectrum charges, licence fees, interests and penalties.

Bharti Airtel has reported a consolidated net loss of Rs23,044.9 crore in Q2 of 2019-20, against a loss of Rs 2,866 crore in the previous quarter, on provisions towards Adjusted Gross Revenue (AGR). Its share price is up 460.70 INR +1.60 (0.35 per cent), it on December 1 announced tariff hike of up to 40 per cent.

Airtel has provided Rs28,450 crore for the dues towards government after the AGR ruling by the Supreme Court.

The company said total provisions as of Sept.30, aggregated Rs 34,260 crore. The company reported deferred tax of Rs8,932 crore for the quarter that helped it pare some of the losses. India is considering requests for financial relief from mobile carriers Vodafone Idea Ltd and Bharti Airtel, the federal finance minister said earlier.

Bharti and Vodafone Idea are due to pay the bulk of Rs920 billion ($13 billion) in overdue levies and interest owed by telecoms firms to the state, after India’s Supreme Court last month upheld a demand by the telecoms department.

Both companies reported combined losses amounting to more than $10 billion on Thursday, after making provisions for the dues owed to the government. They have also asked the government for relief from the charge. Relief measures could include a waiver or deferred payment terms.

New Delhi is not rushing to account for the money it will receive from telecom operators after the Supreme Court ruling, Finance Minister Nirmala Sitharaman told reporters, adding the government was yet to take a final decision on companies’ requests.

India has formed a panel of bureaucrats to suggest ways to alleviate financial pressures on the telecoms sector which once comprised more than a dozen carriers but is now left with three major private players.

Agencies