Bharti Airtel Ltd., Vodafone India Ltd. and Idea Cellular Ltd. sim card packs are arranged for photograph, India (Photographer: Dhiraj Singh/Bloomberg)

Bharti Airtel’s Rs 25,000-Crore Rights Issue Gets Oversubscribed

Bharti Airtel Ltd.’s rights issue to raise Rs 25,000 crore was oversubscribed before it closed on Friday, according to its exchange filing.

Billionaire Sunil Mittal-backed telecom operator, which is looking to pare more than Rs 1,12,000-crore debt, had priced its rights issue at a 31 percent discount. The proposed fund infusion would cut its debt by 19 percent and lower its leverage ratio to 3.5 times its earnings before interest, tax and depreciation and amortisation, according to BloombergQuint’s calculations.

This is the company’s fourth attempt to pare debt. In the past two years, it made nearly Rs 23,000 crore by selling stakes in its tower arm, direct-to-home business and Africa business. Bharti Airtel is also looking to raise Rs 7,000 crore by issuing perpetual bonds, the details of which are not disclosed.

Also read: Can A Flood Of Funds Turn The Tide For Telecom Operators?

Why This Deal?

The fundraise was essential for India’s second-largest telecom operator as its liabilities in the last financial year was more than three times the average cash generated by the company in a decade, BloombergQuint had reported.

Bharti Airtel is locked in a brutal tariff war triggered by Mukesh Ambani-led Reliance Jio Infocomm Ltd., which hurt its profitability and revenue, pushing up debt and leverage. Moody’s for the first time downgraded its credit rating to Ba1 from Baa3, citing intense competition in the world’s second-biggest telecom market.

Also read: This Is How Sunil Mittal Can Reduce Bharti Airtel’s Huge Debt Pile

Other Options

The wireless carrier is also looking at an initial public offering for its Africa business. In 2018, it raised close to Rs 9,200 crore by selling nearly a third of its stake in the profitable unit, valued at about Rs 32,400 crore. As of now, Bharti Airtel’s 65 percent stake in the business is valued at close to Rs 21,000 crore.

The company can also potentially raise another Rs 65,000 crore by selling non-core assets. It holds 80 percent stake in the DTH business, valued at close to Rs 9,000 crore. Its 53.5 percent stake in tower arm Bharti Infratel Ltd. is valued at close to Rs 26,500 crore.

Bharti Airtel also owns optical fibre network of 2,73,600 kilometres across India, which could be worth Rs 27,360 crore based on replacement costs.