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Telecom service provider Bharti Airtel's planned $2.8 billion equity issuance will improve its funds from operations (FFO) net leverage to around 2x and provide funds to strengthen its market position, according to Fitch Ratings. Bharti will raise equity in three tranches, a quarter of the proceeds to be received upfront and the balance in two instalments within three years.

Fitch said the company's management remains committed to an investment-grade rating. The company raised about USD9 billion in financial year ended March 2020 (FY20) and FY21 via equity issuance, selling a stake in subsidiary Airtel Africa Plc and the sale-and-leaseback of towers in Africa.

The management aspires to achieve a debt/EBITDA ratio of around 2x in the long term. Fitch forecast Bharti's capex to increase to about USD5 billion in FY22 of which USD1.5 billion is likely to be paid upfront to acquire 5G spectrum assets.

"We believe that the company will also seek to strengthen its fibre infrastructure -- connecting towers with fibre and backhaul infrastructure to prepare its network to launch 5G services in 2022-23. Capex on 5G infrastructure during 2022-23 will replace 4G investments as 4G coverage is largely complete."

It expects wireless market leader Reliance Jio, a subsidiary of Reliance Industries Ltd, and Bharti to increase their combined revenue market share among private telcos to 80%-82% (June 2021: 77%-78%), at the expense of third-placed Vodafone Idea, which it believes may lose 50 million-70 million subscribers in the next 12 months. 

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