India's largest telecom operator Bharti Airtel on Monday received an approval from its board to raise Rs 16,500 crore to refinance debt and pay spectrum liabilities. This is believed to be Airtel's biggest fund raising plan approved in just one board meeting. For this, the company will raise non-covertible debentures (NCDs) worth Rs 10,000 crore, and issue foreign currency bonds up to $1 billion.
In a BSE filing on Monday, Bharti Airtel said the Board of Directors has approved the "Issuance of Non-Convertible Debentures (NCDs) of up to Rs 10,000 crore 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 company also gave its approval for the Issuance of Foreign Currency Bonds up to a limit of USD 1 Billion or equivalent in one or more tranches.
The company said any funds, if raised from the issuance of aforesaid debt securities, will be used for routine treasury activities, including refinancing of existing debt and spectrum liabilities. A Bharti Airtel spokesperson on March 10 had said: "The Company is seeking approvals in the usual course of business. Any funds raised under such approvals, if granted, are to be used for routine treasury activities, including refinancing of debt and spectrum liabilities." The company will be able to go through its fund-raising plan once it gets approval from its shareholders.
The Sunil Mittal-led firm has gone through consecutive quarters of plunging profits due to the price war unleashed by Mukesh Ambani-run Reliance Jio. The earlier shareholders' nod to raise NCDs up to Rs 10,000 crore is valid till March 12,2018, which is why the company intends to obtain a fresh approval from shareholders, the company said in its BSE filing. Bharti Airtel, in its efforts to reduce debt and compete in the fiercely competitive telecom market, has raised Rs 12,089 crore through its stake sale in its tower unit Bharti Infratel, it said.
Bharti Airtel has also got Rs 2,649 crore investment from Singapore-based telecom operator and partner Singtel. This money would also be used reduce its debt. Singtel will be allotted up to 85,450,000 new equity shares in Bharti Telecom at an issue price of Rs 310 per equity share. The preferential allotment of shares which is expected to be closed by March 2018 would allow SingTel to raise its 'economic interest' in Bharti Airtel by 0.9 per cent to 39.5 per cent. As on December 31, 2017, Bharti Airtel's consolidated net debt stood at Rs 91,714 crore, higher than Rs 91,480 crore in the previous quarter. The shares of Bharti Airtel were trading 4.12 per cent up at Rs 418.50 on BSE on Monday.