Bharti Airtel, a prominent telecom player in India, is reportedly looking to raise $1 billion to prepay its liabilities from the 2015 spectrum auction. The telco is considering the most cost-effective way to raise the funds, including the offshore bond issue. As per an ET report, Airtel may engage with global banks such as Citi and Barclays later this month to decide what would be the best way to raise the funds. Previously, Airtel has leveraged NCDs (non-convertible debentures) and raised funds from mutual funds.
Gopal Vittal-led Airtel has to pay around Rs 10,000-12,000 crore for the 2015 spectrum auction. Raising the funds would allow Airtel to continue with its capex goals to roll out 5G in more parts of India while at the same time, the telco would be deleveraging its balance sheet.
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Airtel Can Also Tap into Rights Issue Proceeds
Going by the report, Airtel hasn't yet started talking with the banks. The talks are expected to happen later this month and both sides (Airtel and the banks) are expected to figure out the best instrument to raise money via the offshore market.
Further, there's also the rights issue proceeds that Bharti Airtel can tap into. The telco raised Rs 5,247 crore only in the first tranche of the Rs 21,000 crore rights issue two years ago. This means that there's still room for the telco to get access to huge funds via the rights issue proceeds. However, for now, it seems like Airtel is more interested in going offshore to raise funds via bonds.
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Bharti Airtel has been rapidly prepaying its spectrum debt and the last spectrum prepayment came in July 2023. It will help Airtel in saving interest costs on its debt. At the same time, the telco has been very much focused on rolling out 5G for consumers in India. Airtel has rolled out 5G in more than 5000 towns/cities in India and plans to complete the rollout by March 2024.
