Airtel gets board nod to raise up to $3 billion2 min read . Updated: 04 Dec 2019, 11:54 PM IST
- Telco will use funds to pay estimated dues of ₹35,586 cr to DoT
- Bharti Airtel will raise $2 bn through one or more instruments such as a QIP, ADR and GDR
NEW DELHI : Directors of Bharti Airtel Ltd on Wednesday approved the telecom operator’s proposal to raise up to $3 billion (around ₹21,500 crore) through a mix of equity and debt. The funds will be utilized to pay the company’s estimated dues of ₹35,586 crore to the department of telecommunications (DoT).
The company will raise $2 billion through one or more instruments such as a qualified institutional placement, compulsory convertible debentures or other convertible securities, American depositary receipts (ADR) and global depositary receipts (GDR), according to a regulatory filing.
Bharti Airtel also plans to raise up to $1 billion by issuing foreign currency convertible bonds (FCCBs), and similar security in a foreign currency, or through redeemable non-convertible debentures, it said.
Bharti Airtel informed the exchanges that, for now, the total quantum of funds to be raised would not exceed $3 billion.
The massive fundraising plan follows the 24 October order of the Supreme Court (SC) in the 14-year-long dispute over the definition of adjusted gross revenue (AGR) between the DoT and telecom firms. The SC asked the firms to pay the dues within three months.
The DoT argued that telecom companies’ AGR included income from the sale of handsets bundled with services, dividends from subsidiaries, besides other income. The DoT contended that the firms had underreported their revenue and, hence, paid lower taxes and levies.
According to a PTI report, Bharti Airtel owes ₹21,682 crore in licence fee dues and another ₹13,904.01 crore as spectrum usage charges. This, however, does not include the dues of Telenor and Tata Teleservices, which were acquired by Airtel.
On 3 December, the company increased the charges of its prepaid voice and data services by up to 47%. Two other private operators, Reliance Jio Infocomm Ltd and Vodafone Idea Ltd have also raised charges by up to 40-42%. Vodafone’s new tariffs came into effect on Tuesday, while Reliance Jio’s revised charges will be applicable from 6 December.
The tariff hike by the three operators is the first of its kind in more than a decade, with years of competition ensuring that prices of calls and data services stay low.
Airtel, which took a hit on profitability since the entry of Reliance Jio in September 2016, has been reeling under heavy debt, but was left with little choice after the SC ruling.
The company posted a massive ₹23,045 crore loss in the quarter ended September due to provisions made towards unpaid dues to the government. It had posted a net profit of ₹118 crore in the year-ago period.
While Airtel and Vodafone Idea have filed a petition in the Supreme court seeking review of the 24 October order, the government is meanwhile not considering a waiver of penalties and interest on outstanding licence fee dues based on AGR, or an extension of the payment deadline.