Sunil Mittal Says Rights Issue Will Improve Bharti Airtel’s Leverage Ratio
Pedestrians walk past an advertisment for Bharti Airtel Ltd. in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

Sunil Mittal Says Rights Issue Will Improve Bharti Airtel’s Leverage Ratio

Bharti Airtel Ltd. expects its fundraising through a rights issue to improve leverage ratio, and provide it an earlier access to building new market opportunities across 5G, fibre and homes.

“We have been loaded by extraordinary debt which we have not imagined a year back,” Sunil Mittal, chairman at the telecom operator, said during an analyst call with investors on Aug. 30. “The AGR (adjusted gross revenue) and spectrum payments have created a load of extraordinary debt on the company.”

The taxes on the telecom industry, he said, remain high. “For every Rs 100 of revenue, Rs 35 goes in various forms of levies. The fresh capital infusion will support the company’s balance sheet in investment to accelerate growth.”

Bharti Airtel’s board at its meeting on Aug. 29 approved a fundraising through a rights issue of size up to Rs 21,000 crore. The shares will be offered at Rs 535 apiece. The entitlement ratio will be one share for every 14 held by eligible shareholders.

Prior to the investor call, analysts had said the carrier’s fundraising through the rights issue would strengthen its balance sheet, creating headroom for 5G investments.

Shares of Bharti Airtel rose as much as 3% to Rs 639.4 apiece on Tuesday, following Monday's 4.2% rally. All the 33 analysts tracking Bharti Airtel recommend a ‘buy’.

Also read: Bharti Airtel Rights Issue: Brokerages Optimistic; Shares Rally

Brokerages’ on Bharti Airtel after Mittal’s interaction with shareholders...

ICICI Securities

  • Maintains ‘buy’ and raises target price to Rs 712 from Rs 675, implying an upside potential of 14.8%.

  • Capex investment in 5G spectrum, fibre and data centre are priorities.

  • No fund will be diverted to buy a stake in Indus Towers and other related group entities.

  • The management sees net debt-to-Ebitda at 2 times soon supported by asset monetisation and free cashflows.

  • The company said 5G auction would happen early next year with rollout starting in the second half of calendar year 2022 onwards in large cities and towns, along with gradual penetration in 2023/24.

  • Except spectrum, the company does not see much rise in network capex due to completion of 4G capex.

  • ARPU expectation at Rs 200 in FY22 is ambitious, but should provide comfort on revenue and free cashflow growth.

  • Cuts Ebitda estimates by 3% for FY22/FY23E.

Also read: Telecom Lobby Sees India Lagging in 5G Unless Airwaves Cost Less

Ambit Capital

  • Rates ‘buy’ with a target price of Rs 808, implying an upside potential of 30.2%.

  • Positive about the company and founders’ thought process of hastening growth investments.

  • The company remains one of the biggest beneficiaries of the telecom market’s pricing reset and is set to capitalise on digitisation trends.

  • Mittal remains confident given the market opportunity and Bharti Airtel’s market share being at a lifetime high across businesses.

  • The company said that by end of 2022, a large percentage of reasonably priced phones will be 5G enabled and therefore there is an urgent need for fiberisation.

  • Expects more clarity to emerge on the company’s capex plans.


  • Reiterates ‘buy’ with a target price of Rs 780, implying an upside potential of 25.7%.

  • Mittal said the rights issue would allow the company to leverage this once-in-a-lifetime opportunity.

  • The mobile revenue market share is at an all-time high; even fibre-to-the-home, data centres, and enterprise businesses are seeing growth acceleration.

  • Mittal expects ARPU to reach Rs 200 in 2022 and Rs 300 longer term.

  • Forecasts Bharti Airtel’s mobile ARPU to rise to Rs 199 by FY24.

  • 5G in India to be a reality in second half of FY23, at least in top cities. However, India’s current 5G spectrum price is exorbitant at $7 billion.

  • 5G capex will largely replace 4G capex.

  • The stock valuation is compelling at 7 times FY23 EV/Ebitda.


  • Rates ‘buy’ with a target price of 730, implying an upside potential of 17.7%.

  • Management articulated its near- and long-term strategy well, with strong visibility on revenue growth across businesses, and expectations of healthy return ratios in the near term.

  • The company did not quantify the potential increase in capex spends to support the high growth rates.

  • Bharti Airtel remains well placed to gain the maximum from tariff hikes given the quality of subscribers and with Vodafone Idea’s weakening financial position leading to a strong influx of new subscribers.

  • Balance sheet well-funded for the impending 5G spectrum auctions and service rollout.

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