Airtel, Jio plan $5.6 billion war chest
MUMBAI: Companies owned by billionaires Mukesh Ambani and Sunil Bharti Mittal may raise as much as ₹36,500 crore ($5.6 billion) selling bonds as the telecom titans build a war chest in what investors hope will be the home stretch in India’s bruising tariff war.
Mittal-controlled Bharti Airtel Ltd, which sold its firstever rupee bond of ₹3,000 core last month, has approval to raise ₹16,500 crore, according to a March 12 filing. Reliance Jio Infocomm Ltd. announced days later that it plans to sell as much as ₹20,000 crore of notes, marking the disruptive upstart’s return to the onshore bond market after 20 months.
The fundraising amount — about 78% of the total outstanding bonds of India’s top four telecom firms — signal that the largest carrier and its rival Jio are gearing to roll out next-generation services and manage about ₹32,000 crore of debt due in the next five years. Jio stormed into the mobilephone market in 2016 with free services that set off a tariff war and forced smaller players to merge or exit.
“After four years of intense price pain, the India telecom battle could be in its last stretch,” said Raj Kothari, head of trading at Jay Capital Ltd in London. “It’s down to the big boys and they are piling up funds for that.”
Emails sent to Bharti and Jio spokesmen seeking details on use of funds went unan- swered.
Bharti said in the filing that the money would be be used for treasury activities, including refinancing, and for paying off spectrum dues. Jio hasn’t specified end use, though it has significant repayments due in the next few years, data compiled by
show.
The total debt at four publicly traded wireless operators — Bharti, Idea Cellular, Reliance Communications Ltd. and Tata Teleservices Maharashtra Ltd — has jumped 55 percent since the end of March 2016 to $34.81 billion, data compiled by show.
Jio, being a new player, needs to spend aggressively to grab market share, while Bharti is investing more to retain its lead, said Mehul Sukkawala, senior director for corporate ratings at S&P Global Ratings.