Bharti Airtel, the country's largest telecom company, has received approval from its board of directors to raise Rs 16,500 crore as it looks to reduce its existing debt and spectrum liabilities. The fund raising comes at a time when the sector is seeing a wave of consolidation amid a competitive price war that has hit companies.
As part of the plan, Bharti Airtel will issue non-convertible debentures of up to Rs 10,000 crore on a private placement basis and separately issue foreign currency bonds up to a $1 billion (close to Rs 6,500 crore) in one or more tranches.
“Any funds if raised from the issuance of aforesaid debt securities shall be used for routine treasury activities including refinancing of existing debt and spectrum liabilities,” the company said on Monday.
Following the aggressive entry of Reliance Jio, incumbents including Bharti Airtel have seen their earnings take a hit as data charges have been sharply cut by companies, who are also offering unlimited voice calls now. Additionally, the cut in inter-connect usage charges has also hurt.
For the quarter-ended December 31, Bharti Airtel reported a consolidated net profit of Rs 306 crore, down 39 per cent year-on-year. The company's net revenue declined 13 per cent to Rs 20,319 crore.
At the end of December, its consolidated debt had increased to Rs 91,714 crore, versus Rs 91,480 crore in the previous quarter.
Bharti Airtel had last year announced plans to acquire the domestic operations of Norwegian telecom company Telenor. Airtel is also in the midst of acquiring the consumer mobile business of Tata Teleservices.
On the other hand, Vodafone and Idea Cellular are expected to compete their merger this year, which is slowly moving towards becoming a four player market.
Airtel has also been over time paring its stake in its tower unit Bharti Infratel, as it looks to reduce debt, free up existing capital and raise fresh capital, to strengthen its 4G telecom footprint.
Bharti Airtel's shares surged 4.7 per cent to close at Rs 420.75 on the BSE. In its report earlier this month, Kotak Institutional Equities had put an “add” rating on the stock, with a target price of Rs 470.