Airtel plans to raise ₹56,000 crore, cut debt by half over 18 months

Airtel plans to raise $1.5 billion by selling 25% in its African unit, and is also considering listing the unit on two exchangesLondon or Amsterdam, and South Africa

Amrit Raj
Updated20 Jul 2018
Airtel had a long-term debt of about ₹1.08 trillion as of 31 March, according to its quarterly report. Photo: Mint
Airtel had a long-term debt of about ₹1.08 trillion as of 31 March, according to its quarterly report. Photo: Mint

Mumbai: Bharti Airtel Ltd is looking to slash its debt by half over the next 18 months by raising a total of 56,000 crore from the sale of a stake in its African unit and a phased sale of its holding in the entity created by the merger of Indus Towers and Bharti Infratel Ltd. Airtel had a long-term debt of about 1.08 trillion as of 31 March, according to its quarterly report.

Bharti Airtel chairman Sunil Mittal has been facing one of the toughest challenges since founding the company in 1995, as rival Reliance Jio Infocomm Ltd, backed by India’s richest man Mukesh Ambani, disrupts business models of established telecom operators with cut-price tariffs. Reliance Jio’s entry has crimped profits of rival operators and forced them to spend more to keep pace with Jio’s investments.

Airtel plans to raise $1.5 billion by selling 25% in its African unit, said a person with direct knowledge of the matter.

Airtel is also debating whether it should look to list its African unit on two exchanges—London or Amsterdam, and South Africa—the person said, adding that the unit will be listed by March-end.

The company will sell an additional 10-15% in the African holding company to Warburg Pincus to raise another $1.5 billion, the Economic Times newspaper reported on Thursday.

“The company is also looking to offload its stake in the tower business, where it will hold 33% stake in the merged entity of Indus Towers and Bharti Infratel Ltd,” the person cited above said. The merged entity is valued at $15 billion. An Airtel spokesperson declined to comment.

“All the funds will be used to cut debt... the company will fund its capex and opex needs through the cash it generates every year,” the person said.

Maintaining a healthy balance sheet will be crucial since telecom operators will have to roll out fifth generation or 5G networks in a couple of years, triggering another round of capital expenditure, said a Mumbai-based analyst on condition of anonymity.

“They need to bring down the debt to a manageable level in order raise money debt later for their capex requirements,” the analyst said.

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