Airtel hires i-banks to help raise funds via dollar bonds
NEW DELHI: India’s second largest operator by revenue Bharti Airtel has hired seven investment banks to help raise funds by selling dollar-denominated perpetual bonds, the company said in an exchange filing on Tuesday.
Bank of America Merrill Lynch, Barclays, BNP Paribas, Citigroup, HSBC, JP Morgan and Standard Chartered Bank will organize a series of investor meetings across Asia, Europe and the US, starting October 2.
Bharti Airtel’s undersea cable unit Network i2i Ltd will be the official borrower, the company said, without divulging how much it plans to raise and the use of such proceeds.
The telecom operator is likely to raise $750 million to $1 billion, and will use it to reduce debt, one person aware of the development said, requesting anonymity. Airtel’s consolidated net debt was ₹1.16 lakh crore as of June-end.
The fund-raising initiative comes at a time when Airtel is battling intense competition from Reliance Jio, which had entered the sector in September 2016. Jio’s strategy to garner subscribers through cheap data tariffs has made it imperative for rivals to pump in funds in the cash-guzzling telecom sector.
To be sure, in March, Bharti Airtel’s promoters and Singapore’s sovereign wealth fund GIC had said they will together invest ₹16,785 crore as part of a rights issue approved by the operator’s board in February. It aims to strengthen its balance sheet and continue investment in networks in a hypercompetitive telecom market.
The announcement came just a week after the company’s board had approved a rights issue of ₹25,000 crore, as well as raising ₹7,000 crore through foreign currency perpetual bonds, taking the total capital raise to ₹32,000 crore.
Raising more funds for the India business has become crucial considering that Airtel’s profit has fallen every quarter since Jio’s entry. In fact, in the June quarter, Airtel posted its first quarterly loss in 14 years at ₹2,866 crore, as finance costs rose and it incurred a one-time loss of ₹1,445 crore. It had recorded net profit of ₹97 crore in the June quarter of 2018.
Airtel’s revenue from the India wireless business was ₹10,724 crore for the June quarter. In comparison, Reliance Jio generated ₹11,679 crore in operating revenue in the same period.
The launch of low-cost tariff plans by Reliance Jio, a unit of Reliance Industries Ltd, forced
BOML, BARCLAYS AMONG BANKS THAT WILL ORGANIZE A SERIES OF INVESTOR MEETINGS ACROSS ASIA, EUROPE AND THE US
rivals to drop their rates, hurting profit margins. Smaller companies were forced to either shut shop or get acquired, leaving just Airtel, Jio and the merged entity, Vodafone-Idea, to compete in the Indian market.
Operators, including Airtel, also need funds to buy airwaves for the launch of 5G services. The department of telecommunications plans to hold the auction in January.
Airtel is also toying with the idea of completely divesting its stake in the proposed merged entity of Indus Towers and Bharti Infratel by selling its stake to private equity funds, Mint reported on September 30.
In June, Airtel Africa had raised $750 million through an initial public offering (IPO). In October 2018, six investors, including Warburg Pincus, Temasek, Singtel and SoftBank Group International, invested $1.25 billion through a primary equity issuance in Airtel Africa. Sunil Kant Munjal of the Hero group was also part of this consortium. In January, Qatar Investment Authority had invested $200 million in the firm’s Africa business.