Bharti Airtel recently said in an exchange filing that it doesn't need to access the remaining Rs 15,000 crore from the rights issue as it has "adequate" cash to meet its immediate fund requirements. Thus, it was the board's decision that they would defer calling the balance amount on partly paid-up shares of the company. Bharti Airtel announced its quarterly results for Q1 FY25 on Monday and the telco posted a net profit of Rs 4,160 crore.
With the industry-leading ARPU (average revenue per user) from mobile services (Rs 211 during Q1 FY25), Airtel is running what can be termed, a "healthy" business. Goldman Sachs in a note said that Airtel has generated $2.3 billion in free cash flow in the last 12 months. Also, the company has announced that it will moderate the capex on the 5G rollout, thus, the company should see an improvement in EBITDA margin this year. Do not forget that Airtel also raised tariffs, meaning they should likely see an uptick in overall revenues in the coming quarters.
Read More - Bharti Airtel Posts Net Profit of Rs 4160 Crore in Q1 FY25, Up 158% YoY
"Since the company is adequately resourced to cater to its immediate fund requirements, the board felt it was prudent to defer calling the balance amount on partly paid-up shares of the company. Accordingly, the balance money on the partly paid-up shares shall be called from the shareholders by the board as and when any large capital outlay and/or leverage considerations make it necessary,” Bharti Airtel said.
Read More - Bharti Hexacom Net Profit Jumps 101.9% YoY in Q1 FY25
For the unaware, Airtel has raised around Rs 5,247 crore in the first tranche from its Rs 21,000 crore rights issue two years ago. The company has the option to raise the remaining amount via additional calls within 36 months of the issue close. Airtel deciding that they don't need to raise the remaining amount is a flex in a sector that is capex heavy and has very low rate of returns on investment. However, note that this doesn't mean that they don't want to raise this money "at all".
Airtel board will notify the exchanges and the investors whenever/if they do proceed with this fund raise.
