New Delhi: Bharti Airtel Ltd’s promoters and Singapore’s sovereign wealth fund GIC Pte Ltd will together invest ₹16,785 crore as part of a rights issue approved by telecom operator’s board last month to help strengthen its balance sheet and continue investing in networks in a hyper-competitive market.
This comes a week after the Bharti Airtel board approved a rights issue of ₹25,000 crore, as well as raising ₹7,000 crore through foreign currency perpetual bond issues, taking the total capital raise to ₹32,000 crore.
The fundraising is crucial for Bharti Airtel as it faces stiff competition from Reliance Jio Infocomm Ltd, which has hit the revenue stream of operators since entering the telecom sector in September 2016 with its cheap tariffs.
Airtel’s profit has fallen every quarter since Reliance Jio’s entry. It plunged 72% from ₹306 crore in October-December 2017 to ₹86 crore in the third quarter of FY19, despite the company recording higher data and voice consumption.
The company’s consolidated net debt stood at ₹1.06 trillion at the end of December.
Bharti Airtel hopes that the fundraising will strengthen its balance sheet and give it the financial flexibility to grab future opportunities. “The fresh capital infusion will help us to continue our investments in future rollouts to build large network capacity and create content and technology partnerships to ensure the best customer experience," Bharti Airtel chief executive officer Gopal Vittal said in a statement on Thursday.
Of the rights entitlement of ₹16,785 crore, the promoter and promoter group will subscribe to ₹11,785 crore, while GIC will subscribe to ₹5,000 crore by way of renouncement in their favour, the company said.
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GIC has confirmed it will subscribe to the renounced entitlement on behalf of the government of Singapore and the Monetary Authority of Singapore.
Bharti Airtel’s promoter and promoter group hold a 67.14% stake in the company, while the public holds a 32.82% stake.
The promoter and promoter group also reserves the right to subscribe either itself or through investors for additional shares in the issue, including in the event of under-subscription by the public, the company added.
Of the 67.14%, promoter Bharti Telecom Ltd owns a 50.10% stake in Bharti Airtel, foreign shareholders such as Indian Continent Investment Ltd, Viridian Ltd and Pastel Ltd together own a 17.04% stake.
Singtel’s total stake in Bharti Telecom is 48.9%, while the Mittal family-owned Bharti Enterprises continues to hold over 50% stake in Bharti Telecom.
In the recent rights issue, Singtel will contribute ₹3,750 crore. With the renunciation to GIC and upon the closing of the rights issue, Singtel’s effective interest in Airtel will be 35.2%, Singtel said in a separate statement on Thursday.
As far as the ₹7,000 crore bond issue is concerned, the board has already given in-principle approval, and Bharti Airtel is in the process of appointing banks to take this forward.
The proposed fundraising also comes at a time when the telecom operator is preparing an Airtel Africa IPO, after having raised $1.25 billion in October in a pre-IPO fund-raising round from large investors, including Warburg Pincus, Temasek, Singtel and SoftBank Group International.
In January, Qatar Investment Authority, the sovereign wealth fund of the state of Qatar, said it would invest $200 million through a primary equity issuance in Airtel Africa Ltd.
Bharti Airtel intends to hold the Airtel Africa IPO in June or July.