Airtel plans to raise ₹56,000 crore, cut debt by half in 1.5 yrs

Firm to sell holding in entity created by merging Indus Towers, Bharti Infratel; stake in African unit

MUMBAI: Bharti Airtel Ltd is looking to slash its debt by half over the next 18 months by raising a total of ₹56,000 crore from the sale of a stake in its African unit and a phased sale of its holding in the entity created by the merger of Indus Towers and Bharti Infratel Ltd.

Airtel had a long-term debt of about ₹1.08 lakh crore as of March 31, according to its quarterly report.

Bharti Airtel chairman Sunil Mittal has been facing one of the toughest challenges since founding the company in 1995, as rival Reliance Jio Infocomm, backed by India’s richest man Mukesh Ambani, disrupts business models of established telecom operators with cut-price tariffs. Reliance Jio’s entry has crimped profits of rival operators and forced them to spend more to keep pace with Jio’s investments.

Airtel plans to raise $1.5 billion by selling a 25% stake in its African subsidiary, said a person with direct knowledge of the matter. Airtel is also debating whether it should look to list its African unit on two exchanges— London or Amsterdam, and South Africa—the person said, adding that the unit will be listed by March-end.

The company will sell an additional 10-15% in the African holding company to Warburg Pincus to raise another $1.5 billion, the Economic Times newspaper reported on Thursday.

“The company is also looking to offload its stake in the tower business, where it will hold 33% stake in the merged entity of Indus Towers and Bharti Infratel Ltd,” the person cited above said. The merged entity is valued at $15 billion, giving Airtel room to raise another $5 billion. An Airtel spokesperson declined to comment.

Mint on April 23 first reported that Bharti Infratel and Indus Towers were planning a merger

BHARTI AIRTEL HAD A LONGTERM DEBT OF ABOUT ₹1.08 LAKH CRORE AS OF MARCH 31, ACCORDING TO ITS QUARTERLY REPORT

to create a telecom tower giant as against an earlier plan of Bharti Infratel buying out Vodafone India and Idea Cellular’s stake in Indus Tower, which has been scrapped.

“All the funds will be used to cut debt... the company will fund its capex and opex needs through the cash it generates every year,” the person said.

Maintaining a healthy balance sheet will be crucial since telecom operators will have to roll out fifth generation or 5G networks in a couple of years, triggering another round of capital expenditure, said a Mumbaibased analyst on condition of anonymity. “They need to bring down the debt to a manageable level in order raise money debt later for their capex requirements,” the analyst said.