Bharti Airtel Board Gives Nod to Raising $3 Billion in Funds

Bharti Airtel has registered losses upwards of Rs 23,000 crore in quarter ending September, but now the telco will raise funds to mitigate its payments

By December 5th, 2019 AT 11:24 AM
Highlights
  • The telco has to pay Rs 35,500 crore worth of dues to DoT
  • A large chunk will be raised from debt and equity shares
  • Airtel has also hiked its tariffs by 40%

Bharti Airtel is one of the other telecom companies which is caught in a financially stifling situation after the verdict on Adjusted Gross Revenue (AGR) by the Supreme Court. The Sunil Bharti Mittal led telecom operator is looking towards almost Rs 40,000 crore worth of dues in the upcoming months. After this event, there has been a lot of chatter in the industry about how Bharti Airtel could raise funds to overcome its cash problems. To do that, the board of directors of Airtel were to meet on December 4. Now, in a new ET Telecom report, it has been noted that the board of directors of Airtel have given their approval for a fundraise worth $3 billion. These funds would be raised by debt or equity as per the information available on the matter. Also, it’s worth noting that previously the figure to be raised was pegged at $4 billion and the board of directors were also asked for the same amount, but the approval has been given for $3 billion only.

airtel-board-nod-raising-funds

Airtel to Raise Significant Amount Through Equity Shares

Out of the total amount discussed, Bharti Airtel will be raising $2 billion from public or private offerings of equity shares, qualified institution placement (QIPs), convertible debentures, convertible securities, warrants, ADR and GDR. Whereas, the remaining amount will be raised by issuing bonds, debentures and warrants on private placement basis. As per a PTI report on the matter previously, Bharti Airtel has to pay Rs 21,682 crore in licence fee and Rs 13,904 crore as spectrum usage charges.

Airtel Files Review Plea in SC

To recall, in the quarterly reports highlighting the data for the quarter ending September, Airtel amounted losses worth Rs 23,000 crore on account of the AGR dues which were provisioned in the balance sheets. The telecom operator also said that if it fails to get any kind of relief in terms of dues, penalties and the interests, its ability to keep on going as a going concern might be at risk. On the other hand, the Supreme Court has given Bharti Airtel and the other telecom operators a deadline of three months to pay the AGR dues. To counter the massive payment, Bharti Airtel had filed a review plea in the Supreme Court seeking reconsideration of interest, penalties and interest on penalties which amount for more than 75% of the total AGR dues.

AGR Issues Increases Trouble for Telecom Companies

It is worth noting that the issue of AGR is the biggest one in the industry right now, which has put immense pressure on the telecom industry right now and the two worst-hit telecom operators in the space happen to be Bharti Airtel and Vodafone Idea. These two telcos together have to pay upwards of Rs 90,000 crore in AGR dues. The new verdict from Supreme Court had said that the definition of AGR would include non-core services as well, which has significantly raised the amount of dues which these telcos have to pay to the DoT. The total burden on the industry happens to be pegged at around Rs 1.3 lakh crore, including the other telecom operators. Reliance Jio has very less dues to pay in comparison.

In terms of relief, the telecom operators have received a two-year payment moratorium from the government, which will allow the companies to have some breathing room. Also, the telecom companies have raised their tariffs by as much as 40% to bring in some more revenue to tackle their cash woes.

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Arpit spends his day closely following the telecom and tech industry. A music connoisseur and a night owl, he also takes a deep interest in the Indian technology start-up scene and spends rest of his time spilling poetry and stories on paper.

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