Airtel’s Rs 21,000 cr rights issue to open on Oct 5

Bharti Airtel’s upcoming rights issue of nearly Rs 21,000 crore will open on October 5, the Sunil Mittal-led telco said in an exchange filing.

A special committee of directors for the rights issue at an Airtel board meeting on September 22 approved “October 5 as the issue opening date and October 21 as closing date,” Airtel said in its regulatory filing.

The company has also set the record date at September 28 to determine shareholders who will be eligible to receive the rights entitlement in the issue.

Bharti Airtel had on August 29 announced plans to raise upto Rs 21,000 crore by selling shares to existing investors in a rights issue, as India’s No. 2 telco builds a war chest to expand its 4G network and prepare for an auction of 5G airwaves and also grow its digital business. Airtel shareholders will receive one share for every 14 held in the telco at Rs 535 a unit.

Global ratings agency S&P Global has revised Bharti Airtel’s outlook to “stable” from “negative,” citing the telco’s improved operating fundamentals and superior leverage management.

Airtel shares rose 1.14% in early trade, and were trading 0.12% higher at Rs 727.60 on BSE Thursday mid-morning.

Airtel’s promoter group — the Mittal family and Singapore’s SingTel — own nearly 56% of the telco. The Mittal family directly and indirectly owns 24.13%, while SingTel holds 31.72%. The rest is held by the public. Since May 2019, Airtel has raised $9.8 billion via equity, debt, stake sales in units and assets sales in India and Africa, which has resulted in the promoter group diluting its holdings.

Airtel’s upcoming rights issue comes even as the four-year moratorium allowed by the government on statutory payouts as part of a recent relief package to the telecom sector is set to give Airtel annual cash flow relief of around Rs 11,900 crore, that is likely to give it further financial headroom to participate aggressively in the 5G airwaves sale likely early next year.

Bharti chairman Sunil Mittal has said Airtel will opt for the four-year deferred option for adjusted gross revenue (AGR) and spectrum payments.

As of end-June, Airtel had net debt of around Rs 1.6 lakh crore. At three times operating profit, this was deemed ‘comfortable’ by industry analysts. Mittal, though, has said he would like Airtel’s debt to reduce to two times the operating profit.