Airtel explores $1bn fundraising to prepay majority of 2015 spectrum dues

Bharti Airtel is set to utilise a portion of its remaining rights issue proceeds to prepay a major part of its balance dues on the spectrum acquired in the 2015 auction, according to a report by The Economic Times (ET). This may have triggered Bharti Telecom (BTL), which owns 38.75 per cent stake in Airtel, to raise around Rs 8,000 crore (under $1 billion) through non-convertible debentures (NCDs

The NCDs will reportedly be raised in three tranches of Rs 2,000 crore, Rs 3,000 crore, and Rs 3,000 crore with two, three, and five-year maturities. The NCDs will also offer an interest rate between 8.9-9 per cent. This fundraising by BTL is expected to be used to subscribe to its remaining entitlement in Airtel’s Rs 21,000-crore rights issue from over two years ago.

According to the ET report, Airtel rights issue entitlement is estimated to be around Rs 8,132.6 crore, which is proportionate to BTL’s 38.75 per cent stake in the telecom. Rs 1,918 crore of this was paid around two years ago, leaving Rs 6,214.6 crore to be paid.

Bharti Airtel bought a spectrum worth Rs 29,130.20 ($3.54 billion) during an auction in March 2015. Out of this it prepaid Rs 8,815 crore in March 2022. Airtel had also raised around Rs 5,247 crore from the Rs 21,000 crore rights issue two years ago. At its September quarter earnings call, Airtel stated it still had about Rs 10,000-12,000 crore (including annual interest of 10 per cent) of dues left from the 2015 spectrum auction, which it aims to pay down. To address the remaining amount, Airtel’s board may make the call within 36 months to prepay bulk, or the entire dues of the 2015 spectrum.