Bharti Telecom sells 2.75% stake in Airtel for INR 84 bln, to fully repay debt

Bharti Telecom, the promoter company of Indian operator Bharti Airtel, has sold a 2.75 percent stake in Bharti Airtel to institutional investors through an accelerated book building process in the secondary market. The allocation was done to over 50 accounts, with the top 10 getting two-thirds of the overall allocation. The total sale proceeds of over INR 84.33 billion (approximately USD 1.15 billion) was over-subscribed multiple times with a mix of all categories of investors, long only and hedge fund investors across geographies in India, Asia, Europe and the US, Bharti Telecom said. 

Bharti Group and Singtel (the ‘Promoter Group’) will continue to own a majority stake in Bharti Airtel at 56.23 percent, following the transaction. Bharti Telecom will use the proceeds from this stake sale to fully repay its debt. With Bharti Telecom becoming a zero debt company, Bharti Airtel’s credit profile will also improve, the company added.

Moody's Investors Service recently downgraded to Ba1 from Baa3 the senior unsecured rating for Indian mobile operator Bharti Airtel as well as the backed senior unsecured notes issued by its wholly owned subsidiary Bharti Airtel Int'l (Netherlands). At the same time, Moody's has assigned a Ba1 corporate family rating to Bharti and withdrawn the company's Baa3 issuer rating. According to Moody's, the downgrade reflects uncertainty as to whether or not the company's profitability, cash flow situation and debt levels can improve sustainably and materially, given the competitive dynamics in the Indian telecom market.

Back in January, Bharti Airtel announced the completion of a USD 3 billion offering of new shares and convertible debt. The money was to go to paying outstanding regulatory fees, as well as strengthen the balance sheet and finance capex.