Telecom major Bharti Airtel said on Thursday its promoters would take part in the Rs 32,000-crore capital infusion plan by subscribing to its rights issue. Promoter Singapore Telecommunications Ltd (Singtel) will subscribe to 170 million shares in the Airtel's rights issue for a total consideration of Rs 3,750 crore, the Singapore-based company said.
Singtel and Airtel's major shareholders - Bharti Group and Bharti Telecom - intend to subscribe to their full entitlement, except for a renunciation by Bharti Telecom in favour of GIC Singapore, Singtel said.
Airtel's fund-raising plans entail rights issuance of up to Rs 25,000 crore and Perpetual Bond with equity credit of up to Rs 7,000 crore (about $1 billion).
S&P Global Ratings has said Bharti Airtel's proposed rights issue of up to Rs 25,000 crore is not enough to stabilise its credit rating.
The rating agency said there is a negative outlook, an indication of the rating downgrade, which looks at renewed competition and higher capital spending by the company that will keep its debt level up.
"S&P Global Ratings believes the proposed rights issue (of Rs 25,000 crore), if successful, would go a long way in restoring Bharti's balance sheet and shoring up leverage."
The net debt of Bharti Airtel at the end of the third quarter of 2018-19 stood at Rs 1. 06 lakh crore.
Another credit rating agency Moody's Investor Service has come out with different perspective on the proposed rights issue. Moody's said the Airtel's proposed rights issue is "credit positive" as it will enable the company to pare debt and improve liquidity.
The Moody's statement said it still expects a significant portion of proceeds from the rights issue to be used to lower debt, strengthening Airtel's balance sheet and providing the company with greater financial and operational flexibility for its Indian operations.
The Bharti Airtel share price saw marginal gains following the announcement of promoters taking part in the rights issue. Bharti Airtel share price rose up to 312 level after opening at 309 level in trade on the BSE. However, the stock price closed 0.19% lower at 308.75 on the BSE.