Bharti Airtel forms panel for fundraising to strengthen capital structure

Market estimates it to raise close to Rs 150 bn as the firm seeks to reduce debt, boost cash flows, meet capex

Bharti Airtel on Thursday said it formed a specialised committee of directors to explore options for fundraising to strengthen its capital structure and balance sheet.  In its board meeting held on Thursday, Airtel's Board formed and authorised a special committee of directors for fundraising, the company said in a notification to the exchanges. 

The market was abuzz about Airtel's fundraising plans (estimated to be close to Rs 150 billion or more) as the telco sought to reduce debt, boost cash flows and meet capital expenditure. 

Last month, Airtel's rival Vodafone Idea (VIL) said it intended to raise Rs 250 billion to execute its market strategy. As such, Q2 proforma capex for Airtel was Rs 76.8 billion while VIL's was Rs 33 billion and Jio's was the most elevated at Rs 160 billion. 

Analysts feel that capex spends by telcos are likely to reach new highs as Reliance Jio has clearly indicated it would continue to spend. This, feel industry observers, is an indicator of extended competitive intensity and further price wars. 

Further, Bharti Airtel's board approved transfer of 32 per cent equity shares of Bharti Infratel owned by the company to its wholly owned subsidiary Nettle Infrastructure Investments on Thursday as part of its plans to monetise its stake in Bharti Infratel. 

Post this transfer, Bharti Airtel will own 18.3 per cent, Nettle Infrastructure will 35.2 per cent and the remaining 47 per cent shares will remain publicly held respectively in Bharti Infratel.

Bharti Airtel, in October, reported a 65 per cent drop in the July-September net profit to Rs 1.18 billion as compared to the year-ago quarterly net profit of Rs 3.43 billion. Following the earnings release, Bharti Airtel India & South Asia Managing Director and Chief Executive Officer Gopal Vittal stated: "ARPU decline has moderated in this quarter. We remain focused on driving quality base growth with value adding propositions for our customers."

In the last quarter (July-September), Bharti Airtel's consolidated net debt rose by Rs 105 billion to Rs 1.18 trillion.

Badal Bagri is new CFO

Bharti Airtel also announced the appointment of Badal Bagri as chief financial officer and key managerial person (KMP) of the company following the exit of company veteran Nilanjan Roy. Roy's appointment as CFO of India's second largest IT company Infosys was also announced on Thursday.