Bharti Airtel to raise Rs 165 bn to refinance debt and pay for spectrum

The telecom major has a consolidated net debt to the tune of Rs 917.14 bn at the end of Dec 2017

The board of Bharti Airtel has approved raising of about Rs 165 billion through a mix of issuing non-convertible debentures (NCDs) and foreign currency bonds that will be used for refinancing of existing debt and spectrum liabilities.

As per a regulatory filing by the company, the board has approved "issuance of NCDs of up to Rs 100 billion on a private placement basis in such tranches/series and at such rates as may be approved from time to time on cumulative basis along with all NCDs issued by the company," the filing said.

Also, it added foreign currency bonds up to a limit of $1 billion (about Rs 64.82 billion) will be issued in one or more tranches.

The company, which is in close competition with latest telecom entrant Reliance Jio, has a consolidated net debt to the tune of Rs 917.14 billion at the end of December 2017.

The company said its earlier approval of shareholders' obtained for the issuance of NCDs up to Rs 100 billion is valid for a period of one year till March 31, 2018 and that is why it is seeking a fresh approval from shareholders.

The Sunil Bharti Mittal-led company further said any funds raised from the issuance of debt securities shall be used for routine treasury activities including refinancing of existing debt and spectrum liabilities.

As per information available with Airtel, it has issued multiple long-dated bonds across USD, EUR and CHF to raise the equivalent of $6.2 billion till date. These bonds are spread across maturities ranging from 5 to 10 years. Some bonds are due from 2020 to 2025 and one 1 billion euro bond is due this year.

The company had been raising money for the past one year to pare debt. It has also reduced stake in tower subsidiary Bharti Infratel to get an additional amount of funds as it looks to fight off Reliance Jio. The company may further dilute its stake in Infratel.

To gear up its war chest, Airtel had already announced to increase capital expenditure guidance for the financial year 2018 to Rs 250 billion from Rs 200 billion.