A man carries banana near a billboard displaying Bharti Airtel Ltd. adevertisement in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

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

Billionaire Sunil Bharti Mittal plans to infuse funds into India’s No. 2 telecom operator as debt and capital requirement rise amid a bruising tariff war.

Mittal is looking at selling fresh shares, listing his profitable Africa business and divesting non-core assets to raise funds. The company hasn’t spelled out the details.

A committee is considering the options, Mittal told BloombergQuint on the sidelines of the World Economic Forum in Davos, Switzerland. “And you will probably hear something from the board and the committee in the coming weeks. We will recapitalise the company.”

Spectrum costs and rock-bottom data tariffs since India’s richest man Mukesh Ambani launched Reliance Jio Infocomm Ltd. in September 2016 has increased Bharti Airtel’s debt to more than Rs 1,00,000 crore and its leverage to 4.25 times.

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

Also read: Davos 2019: Sunil Mittal Says The Telecom ‘Haemorrhage’ Stops This Year

Here’s how Bharti Airtel can bring down its debt to a comfortable level:

Equity Dilution

Bharti Airtel is considering issuing new stock and even Mittal could participate. “I’ll put more money, what’s the problem?” he quipped.

The promoter group owns 67 percent of the company, while the rest is held by public shareholders. A fresh issuance to raise Rs 10,000 crore could dilute the company’s equity by 7.6 percent, according to BloombergQuint’s calculations.

Africa Listing

Last year, Bharti Airtel raised close to Rs 9,200 crore by selling close to a third of its stake in the profitable Africa business. The transaction valued the unit at about Rs 32,400 crore.

Listing the business will help the parent raise funds to pare debt. Bharti Airtel’s 65 percent ownership in the unit is valued at close to Rs 21,000 crore. The company can also choose to issue new shares while listing and use the proceeds to pare its African subsidiary’s Rs 34,600-crore debt.

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

Stake Sale In Non-Core Businesses

Bharti Airtel owns a direct-to-home unit, and tower and fibre assets. Selling stake in these businesses could fetch at least Rs 36,000 crore, according to BloombergQuint’s calculations.

This includes an 80 percent holding in the DTH business worth Rs 9,000 crore and a 53.5 percent stake worth Rs 27,000 crore in the tower arm Bharti Infratel Ltd. The company also owns pan-India optical fibre network of 2,63,507 kilometers– it has yet to disclose its value.