Mumbai: India’s top telecoms firm, Bharti Airtel Ltd, may raise about $3 billion to $4 billion in debt if merger talks with South Africa’s MTN Group succeed, four banking sources said on Monday.
Bharti and MTN on Monday said they had restarted merger talks that would create a leading emerging markets telecoms group.
The Indian firm has sounded out banks for the debt raising, said the bankers, who spoke on condition of anonymity.
Standard Chartered, which is advising Bharti, has agreed to underwrite about $1 billion and will help in raising the balance through a mix of short-term and long-term paper, the sources said.
“Adding $3-4 billion to the balance sheets of the two isn’t such a big deal,” said one banker with knowledge of the deal.
A Standard Chartered spokeswoman in Mumbai said it would be inappropriate for the bank to comment at this stage.
Bharti said it does not plan a rights issue of shares to fund the deal.
Earlier, Bharti said the potential value of the complex deal in which both firms pay cash and stock for stakes in each other was more than $23 billion. That would make it the world’s top non-pharmaceutical deal so far this year.
Debt would be the best option for Bharti, analysts said, as the firm has started seeing positive cash flows and dividends from MTN would help it service the debt.
Bharti had $629 million in net debt at the end of March, representing a net debt to EBITDA of 0.25, making it easier for the firm to take on more debt.