Airtel raises $3 bn via bonds, QIP to help meet govt dues
NEW DELHI: Bharti Airtel Ltd raised $3 billion from the sale of shares and bonds to help pay government fees falling due in about a week.
The New Delhi-based company, which was ordered by the Supreme Court to pay $3 billion in airwaves and license fees, raised $2 billion from a qualified institutional placement, according to a statement on Wednesday. It also collected $1 billion from the issuance of convertible bonds.
In its October verdict, the Supreme Court told many operators to pay as much as ₹1.47 lakh crore of dues accumulated over years, r ul i ng on a di s pute between the government and the companies over the calculation of fees. While the court is considering appeals against that order, the carriers meanwhile have time until January 24 to make the payment.
The $2 billion QIP placement, which is done relatively faster because it doesn’t allow retail participation, is the second-largest deal on record of its kind, after State Bank of India’s $2.3 billion in 2017, according to data compiled by Bloomberg.
After the QIP issue, the holdings of the comapny’s promoter and promoter group will come down t o 5 8 . 9 8 % as against 62.70%, Bharti Airtel said in a statement.
“The company...will issue 32,35,95,505 equity shares of face value of ₹5 per equity share at a price of ₹445 which implies a discount of 1.57 per cent on the SEBI (Securities and Exchange Board of India) determined floor price of ₹452.09 per equity share,” the statement said.
Earlier this month, shareholders of Bharti Airtel had approved proposals to raise up to $2 billion (over ₹14,000 crore) in equity and another $1 billion (around ₹7,000 crore) in debt.
In a statement on Wednesday, Airtel said it has “raised USD 2 billion through the QIP route and USD 1 bi l l i on t hrough FCCBS”. The participation was by a diversified investor base, which includes global long only funds, sovereign wealth funds, domestic mutual funds, multistrategy funds and insurance companies in sizable quantities, it added. Long only investors comprised 80% of the demand for the QIP.
The company said the bond offering was oversubscribed multiple times with strong demand from Asian and European funds.
“The FCCB was priced at a coupon of 1.5% per annum, yieldto-maturity of 2% per annum and a conversion premium of 20 per cent above the final QIP price of ₹ 445,” it said.
Against fierce competition from Reliance Jio Infocomm Ltd., Indian telecommunications companies have been struggling in the past few years and Bharti Airtel is no exception. The firm, once India’s No. 1 carrier, has slipped to the third position and reported a record loss in the quarter ended September because of a one-time charge taken for the payment.
Harjeet Kohli, Group Director of Bharti Enterprises, said the offering witnessed a strong response from the global and domestic investor community, despite a volatile market environment and challenging global macro-economic conditions.
“This underlines Airtel’s growth oriented financial performance and future growth potential of our business and the sector. We are delighted with the participation and continuing support of high quality investors thereby ensuring further diversification of the shareholder base of Bharti Airtel.” Airtel said that the proceeds of the fund will be used for augmenting the company’s long term resources and strengthening the balance sheet, servicing and repayment of short term and long term debts, towards statutory dues, and long term working capital requirements.
Airtel shares closed at ₹467.10 apiece on Wednesday, 0.50 per cent lower than the previous closing.