Airtel gets nod to raise ₹16,500 cr in debt

TELCO PLANS TO USE FUNDS TO REFINANCE BORROWINGS AND PAY SPECTRUMRELATED DUES TO THE GOVT

Bharti Airtel Ltd on Monday said its board has approved a plan to raise as much as ₹16,500 crore by selling nonconvertible debentures and foreign currency bonds to refinance borrowings and pay spectrum-related dues to the government.

“Subject to the approval of the shareholders and other requisite approvals, the board of directors in its meeting held today approved the issuance of nonconvertible debentures (NCDs) of up to ₹10,000 crore on a private placement basis in such tranches and at such rates as may be approved from time to time on cumulative basis along with all NCDs issued by the company; and issuance of foreign currency bonds up to a limit of $1 billion or equivalent in one or more tranches,” the company said in a filing to stock exchanges.

The country’s largest telecom operator has in the last one year announced several measures to trim debt and defend its business under an onslaught from newest entrant Reliance Jio. The Mukesh Ambani-controlled com- pany hit the revenue streams of rivals, first through free offerings and later through cut-price data tariffs. Bharti Airtel’s net profit plunged 39% to ₹306 crore in the three months ended December 31, as India’s telecom regulator more than halved interconnection usage charges, levied by mobile networks handling incoming calls from rival networks, and the pricing war triggered by Jio’s entry continued unabated.

According to a Mumbai-based analyst, the borrowing does not fundamentally change anything for Bharti Airtel, and the company is merely refinancing debt. “Nothing changes. Also, interest rates are rising overall; so, maybe they want to raise funds right now before cost of borrowing goes up further,” this analyst said on the condition of anonymity.

Bharti Airtel’s consolidated net debt also increased to ₹91,714 crore as of December 31 from ₹91,480 crore in the previous quarter. Its net debt excluding the deferred payment liabilities to the department of telecommunications and finance lease stood at ₹44,677 crore which implies that its spectrum related obligations to the telecom department stood close to ₹ 47,037 crore as of December 31.

The company has an immediate upcoming payment to make for bonds worth €1 billion (which it previously issued at 4% annual coupon rate) which are due to mature in 2018.