MUMBAI: Bharti Airtel promoters including GIC, investment arm of the Singapore government, as well as its single largest shareholder Singtel have committed to fully subscribe to their rights component in the forthcoming Rs 32,000 crore fund rising plan that includes rights issue to the tune of Rs 25,000 crore rights issue, the company said on Thursday.
“The entire rights entitlement of Promoter and Promoter Group of approximately Rs 167,857 million will be subscribed by them and GIC, with Promoter and Promoter Group subscribing to Rs 117,857 million and GIC subscribing Rs 50,000 million (Rs 5,000 crore) by way of renouncement in their favour,” Bharti Airtel said.
The proposed rights issue is at Rs 220 a share comes at a discount to the current market price of around Rs 308 a share. Apart from the rights, the firm also proposes to raise Rs 7,000 crore via foreign currency perpetual bond issue. The fund infusion plan, it said, would “significantly bolster company’s capital structure by way of deleveraging and augment ability to invest in future network rollouts”.
“The Rights Issue reiterates the confidence of our shareholders in the competitive strength and sound business strategy of Airtel. It shall further strengthen our balance sheet with desired financial flexibility so as to meet future opportunities, particularly in the rapidly transforming Indian mobile market,” said Gopal Vittal, MD and CEO (India & South Asia), Bharti Airtel.
The fund-raising exercise is likely to bring down the net debt to EBIDTA ratio to 3.5x from the estimated 4.5x, Motilal Oswal said in a report. “...Despite the steep dilution, the fund raising plan is a welcome positive, which will allow BHARTI to be self-sufficient and manage operations without any ARPU increase,” it said.