Bharti Airtel begins debt restructuring

India’s biggest wireless telephone company, Bharti Airtel Ltd, is talking to key bankers to raise funds from abroad by the first quarter of 2013

India’s biggest wireless telephone company, Bharti Airtel Ltd, is set to start a debt restructuring plan and is talking to key bankers to raise funds from abroad by the first quarter of 2013. The company is looking to raise up to Rs 5,500 crore from the overseas markets to swap with its local loans, a banking source said.

Bharti Airtel is talking to Mitsubishi Bank to raise funds from the Japanese market and has given the mandate to the Japanese bank to tap local sources of funds, the source said. Bharti Airtel, which has debt of Rs 69,000 crore of debt on its books till March this year, is looking at all options to raise funds including bonds with a longer tenure, a banker said.

When contacted, a Bharti Airtel official declined to comment on its plans to tap funds from the overseas markets. Analysts say Bharti Airtel, which has a market capitalisation of Rs 1,19,280 crore, has to take immediate steps to cut costs as its earnings fell for the last two quarters.

QUEST FOR FUNDS

• India’s biggest wireless telephone company, Bharti Airtel Ltd, is talking to key bankers to raise funds from abroad by the first quarter of 2013
• The company is looking to raise up to Rs 5,500 crore from the overseas markets to swap with its local loans
• Analysts say Bharti Airtel, which has a market capitalisation of Rs 1,19,280 crore, has to take immediate steps to cut costs as its earnings fell for the last two quarters

Its stock price has come down by 8.5 per cent in the year to date against a 26 per cent rise on the Sensex as the company faces challenges to win new customers for its 4G and 3G data services.

The company also took loans to fund its $9 billion takeover of Zain’s assets in Africa which is straining its financials. Analysts say companies like Bharti with foreign currency debt are raising money overseas to roll over their loans.

"For companies with dollar-driven earnings, it makes sense to raise money through this route as they get a natural currency hedge," said Ajay Saraf, executive director, ICICI Securities. Bankers said majority of such money raised is used for working capital requirements.

With its foreign debt issue, Bharti joins a host of Indian companies which are raising funds from foreign banks to refinance the local loans. India’s largest corporate Reliance Industries has raised $4 billion of Rs 21,700 crore in 2012 from foreign banks to fund its Rs 97,683 crore petrochemicals, oil and gas expansion in India. Adani Enterprises has also announced that it will raise close to Rs 8,140 crore or $1.5 billion from abroad in the first quarter of 2013, to fund its overseas projects in Australia. As of now year-to-date, Indian companies have raised close to $8.1 billion as dollar denominated bonds.