Bharti Airtel parent eyes $1 bn from stake sale to pay off loans

Move to help telco clean up debt overhang as promoter debt also impacts ratings

Bharti Telecom, the promoter firm of Bharti Airtel, plans to raise $1 billion by selling a 2.75% stake in the mobile services provider, The Hindu has learnt.

The block deal, which is likely to take place on Tuesday, will be conducted at a floor price of ₹558 per equity share through secondary placement, according to a person aware of the development.

This is a discount of 6% to the last closing price of ₹593.20 on May 22 (Friday) on the National Stock Exchange.

The stock exchange was closed on Monday (May 25) on account of Eid-Ul-Fitr.

Another source said the move will help make Bharti Telecom debt free. “Post the deal, there will be zero debt at promoter level,” the source said. Bharti Telecom’s shareholding in Bharti Airtel stands at about 38.79%, as per information available on the BSE.

The source added that this will help Bharti Airtel by cleaning up debt overhang as many rating agencies take into account the promoter company’s debt as well.

“The move will also create capacity at Bharti Telecom for any further capital or shareholder support requirement at Bharti Airtel.”

The block deal, involving about 150 million shares, will be conducted by J.P. Morgan India Pvt. Ltd.

Shares at record highs

Interestingly, the move comes at time when Bharti Airtel shares have been trading at near record highs since it announced its financial results last week.

The company had posted a loss of ₹5,237 crore for the January-March 2020 quarter due to an exceptional charge on account of reassessment of statutory dues.

Without the exceptional item, the net loss for the quarter was ₹471 crore, the company had said.

Bharti Airtel’s revenue for the quarter, however, grew 15% to ₹23,723 crore year-on-year.

Higher ARPU

Following the hike in tariffs last December and an increase in 4G customer base, Bharti Airtel also saw its ARPU (average revenue per user) going up to ₹154 in the reported quarter.

This is against an ARPU of ₹135 in the October-December 2019 period, and ₹123 in the year-ago quarter.