India’s one of the biggest telecom companies are planning to raise to Rs 21,000 crore by selling shares to existing investors. Currently, Airtel ranks as India’s No. 2 telecom operator and this latest development comes as the telecom giant is planning to bolster its cash reserves to pay statutory dues, expand and deepen its network and prepare for the auction of 5G airwaves and roll-out of the technology.
According to official sources, shareholders will be receiving one new share for every 14 shares held at Rs 535 each, and the offer is at a nearly 10% discount to the stock’s closing price of Rs 593.95 on the BSE on Friday.
The board “comprehensively reviewed the industry scenario, business environment, financial/ business strategy of the company and approved the company’s plan to raise further capital.”
The promoter group of the company which is the Mittal family and Singapore’s SingTel currently own nearly 56% of the telco. And the Mittal family, directly and indirectly, owns 24.13%, while SingTel holds 31.72%. The rest of the shares are held by the public.
Airtel telecom board has now constituted a special committee of directors to decide on other terms and conditions including the issue period and the record date for the share issue. “The rights issue will strengthen Airtel’s balance sheet and is a clear positive signal from Bharti promoters about the telco’s growth prospects, and the likelihood of it grabbing more market share from struggling Vodafone Idea in coming quarters.”
in two years, this will be the company’s second rights issue and in its first raise, it managed to acquire Rs25,000 crore in May 2019 and so far the carrier has raised $9.8 billion via equity, debt, stake sales in units and assets sales in India and Africa.
According to sources, Airtel is currently ender a net debt of around Rs1.6 lakh crore at the end of June 2021. At three times operating profit, this was deemed ‘comfortable’ by industry analysts. According to Goldman Sachs, the telecom needs to reportedly pay Rs 4,100 crore in adjusted gross revenue dues to the government by March 2022, and the company also has to pay a spectrum fee of Rs 8,500 crore coming up in FY23.
