To repay the dues of Spectrum, Bharti Airtel found a new way. The second-largest telecommunication in India has set the target of collecting $ 1 billion (approximately Rs 8, 330 crore) through fundraising. According to multiple reports, Sunil Bharti-led company is allegedly looking to establish fundraising of Rs 8,330 crore along with offshore bonds. The vision of collecting the funds to use in the form of prepay a significant portion of the remaining dues linked to the spectrum that was obtained in 2015 during the auction. As we already mentioned, the collection that the company is aiming to get through fundraising could also include a potential bond issue.
The reports of The Economic Times state that Bharti Airtel is also expected to get involved with the top global banks such as Citi and Barclays by the end of this month (November 2023) to have a discussion on the preferred method or way of collecting fundraising and to set the pricing details. It is worth noting that the telecom firm is in debt of Rs 12,000 crore in deferred liabilities, inclusive of 10% annual interest. As soon as the news came forward, many news websites shared their reports on this. One of the news websites has talked with senior bankers who already know the whole matter.
As per senior bankers, the firm has been looking into the matter and inquiring about the most profitable way to raise funds or to look at the option of a bond route. As per Economic Times, a senior banker states that “They (Bharti Airtel) have been intermittently making enquiries about the profitable way to raise the funds and whether or not to tap the bond route… That decision hinges on whether the current environment for dollar funds is competitive enough vis-a-vis the domestic market. In the past, sometimes they have opted for NCDs and tapped into mutual funds.”
If things go according to the plans, this refinancing method will help the company to save its annual interest costs, boost cash flows and fortify the balance sheet of the company as it continues to expand the coverage of 5G. Apart from it, the second largest telecom of India is also thinking of the option to access a portion of its rest of the right issue which proceeds to prepay some of the auction dues of spectrum in 2015. In the first tranche, Airtel has raised Rs 5,247 crore of the Rs 21,000 crore rights issues in 2021. Besides it, Airtel had purchased 111.5 MHz of spectrum for around Rs 29,130.2 crore.
In a total of this amount, around Rs 7,832.6 was already paid and the rest of the amount of Rs 8,815 has been paid in two tranches in the month of March 2022 and in July 2023, the company has paid Rs 8,025 crore. In October, the telecom giant reported a 37% decline in net profit at around Rs 1,341 crore for the quarter ending 30th September 2023 because of a one-time charge of Rs 1,570 crore. The revenue of the company increased by around 7% to Rs, 37,044 crores in Q2FY24. In Q2FY23, the revenue was reported at Rs 34,527 crore.