Bharti Airtel Raised Rs 69,000 Crore In Three Years To Fend Off Reliance Jio

Bharti Airtel Ltd. has managed to pare debt in the last three years even as Reliance Jio Infocomm Ltd. disrupted the world’s second-biggest telecom market with its dirt-cheap plans.

The Sunil Mittal- and Singapore-based SingTel-controlled telecom operator, now India’s largest by active subscribers, raised close to Rs 69,000 crore via equity issues and stake sales, according to data compiled by BloombergQuint. That helped the carrier lower its debt by Rs 9,300 crore during the period even as capital expenditure remained high and lower profits led to greater cash burn.

Billionaire Mukesh Ambani’s telecom venture, also the nation’s youngest, wooed customers with cheap data plans since its launch in 2016. That hurt incumbents as their profit fell and the sector’s core revenue dropped by more than a fifth, forcing the private carriers to either merge or shut shop.

To defend Reliance Jio’s onslaught, Bharti Airtel in 2017 raised close to Rs 14,000 crore by selling a 10.3 percent stake in Bharti Infratel Ltd. to a consortium led by private equity investor Kohlberg Kravis & Roberts and pension fund Canada Pension Plan Investment Board and another 8.2 percent in two tranches in open market. It also sold a 15 percent stake in its DTH arm, Bharti Telemedia Ltd., to Warburg Pincus.

Next year, Bharti Airtel again raised about $1.25 billion by selling stakes in its profitable African business to six investors—Warburg Pincus, Temasek, Singtel, SoftBank Group International, Bharti Mittal Family group and Sunil Munjal. The company used the proceeds to repay Airtel Africa Plc.’s debt worth $5 billion and for the growth of its Africa operations.

At the start of this year, the company raked in close to $200 million from Qatar Investment Authority by selling additional stake in the Africa unit.

In June, it raised Rs 25,000 crore via rights issue, which was attractively priced, to pare debt and for general corporate purposes. The rights issue was oversubscribed and received commitment from a new investor—the Government of Singapore. GIC Pvt. Ltd., backed by Singapore’s government and monetary authority, subscribed to shares worth Rs 5,000 crore in the rights issue.

In July, it listed the Africa unit on the London Stock Exchange, raising more than Rs 5,000 crore.

Bharti Airtel has proposed to raise another Rs 14,300 crore via equity shares or convertible instruments to repay adjusted gross revenue liabilities and debt refinancing. So far in 2019, the company has raised close to Rs 31,600 crore.

Even after raising close to $10 billion in last three years, Bharti Airtel has an option to raise another $11 billion (Rs 79,237 crore) by selling its non-core business, according to BloombergQuint’s calculations.

• Bharti Airtel owns 56 percent stake in the African unit, valued at close to Rs 15,000 crore at the current market price.
• It can also offload its other non-core assets including direct-to-home, tower and fibre businesses to repay dues and deleverage its balance sheet.
• Based on the previous deal, the company’s 80 percent in the DTH business is valued at nearly Rs 9,000 crore.
• Its 53.5 percent ownership in Bharti Infratel at the current market price is worth Rs 25,750 crore.
• According to BloombergQuint’s calculations, the company’s India optical fibre network of 2,94,867 kilometre is valued at Rs 29,487 crore.