Airtel Sells 3.65% in Tower Unit for .₹ 2,570 cr
Stake sale to a clutch of global investors to help the telco bring down its debt and tackle price war triggered by new entrant Rel Jio
Kolkata: Bharti Airtel has raised .₹ 2,570 crore by selling 3.65% stake in its tower unit to a clutch of global investors, including Fidelity International, a move that would help the top mobile operator pare its debt and stay aggressive in a price war triggered by Reliance Jio.
The Sunil Mittal-led telco on Tuesday said it sold 67.53 million shares in Bharti Infratel to a mix of global tower company investors, fund managers and long-only funds, including many repeat investors, at .₹ 380.60 per share, totalling .₹ 2,570.19 crore.
Bharti Infratel's existing minority stakeholders, KKR and Canada Pension Plan Investment Board (CPPIB), are also believed to be among the potential buyers, but this could not be independently confirmed by ET. Airtel did not respond to ET’s emailed request to identify the investors as of press time
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on Tuesday. Fidelity and KKR declined to comment while a mail to CPPIB remained unanswered as of press time.
The sale price represented a 4% discount to Bharti Infratel’s previous closing price of .₹ 397.90 on the BSE, Airtel said. The share closed at .₹ 382.05 on the BSE on Tuesday. The price fall was “a reflection of the deal happening” at a discount, a Mumbai-based sector analyst said on condition of anonymity. Airtel’s stock closed 0.31% up at .₹ 419 on the BSE, after a 0.77% intra-day fall in early trading hours.
Airtel concluded the secondary share sale through its wholly-owned arm Nettle Infrastructure Investments.
Earlier in March, Bharti Airtel had sold 10.3% of its tower arm stake to a consortium of KKR and Canada Pension Plan Investment Board (CPPIB) for .₹ 6,193.9 crore, or about $952 million, at .₹ 325 per share.
With the latest sale, the collective stake of Airtel and its wholly owned subsidiaries in Bharti Infratel has dropped to 58%. UBS and J P Morgan were the bankers for the transaction, Airtel said. The telco said it would primarily use the sale proceeds to reduce its debt.
The telco’s consolidated net debt totalled $13.6 billion in the fiscal first quarter ended June, a period in which its interest cost rose to .₹ 1,789 crore from .₹ 1,631 crore a year ago.
Its operating cash flow has been under pressure amid a squeeze on revenue as voice and data rates fell sharply under competitive pressure.
Airtel plans a capital expenditure of $2.5 billion in the current financial year in India where it is expanding 4G network and deepening 3G network.
“The latest Infratel stake sale proce- eds will improve parent Airtel’s nearterm liquidity management,” said an analyst at a leading global brokerage who did not wish to be named. Debt reduction, he said, would also “lower Airtel’s leverage”, which, in turn, would enable the company to step up borrowings and boost capex spends on data network expansion to compete more effectively with Jio in coming quarters.
The stake sale comes at a time the telecom leader is believed to be considering selling even a controlling stake in Infratel in an effort to pare its debt and release funds for network expansion. Airtel in March transferred 21.63% holding in Bharti Infratel to Nettle, as share price declined amid industry consolidation that threatened tenancies and revenue.
Of the stake held by Nettle, 10.3% was sold to a consortium of KKR and CPPIB. Since that sale, Bharti Infratel shares have climbed nearly 25% on the BSE on expectations that a healthier telecom industry.