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

The Economic Times - - Companies: Pursuit Of Profit - Our Bureau

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

Catch the Sig­nal

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.

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