Bharti Airtel might be looking to invest in its 4G networks to increase capacity for adding Vodafone Idea (Vi) subscribers. In a note, Jefferies said that Bharti Airtel’s fundraising plans might be in line with purchasing the spectrum from Vi at distressed rates or to invest and to invest on network capacity for giving Vodafone Idea subscribers a home.
As per the analyst, there’s no urgent need for the telco to raise capital. That is actually true. Even though Airtel has to make spectrum payments and adjusted gross revenue (AGR) dues, the due date of the payments is still quite far, and the telco isn’t in need of huge amounts of urgent cash.
Bharti Airtel Might be Raising Cash for This Reason
The reason why Bharti Airtel might be raising cash is to have enough in the bank to ensure its networks can be upgraded in time to add all the new users. Further, the telco can bank on Vi’s desperate situation of cash requirements and purchase spectrum from the company at distressed valuations.
Bharti Airtel is already cash-flow positive and making profits. The telco is just aware of the fact that it can make good use of the extra money in the bank account to compete heavily with Jio. According to Jefferies, Vodafone Idea customers have already started joining the networks of Reliance Jio and Bharti Airtel.
As per the data shared by the Telecom Regulatory Authority of India (TRAI), there were 12.27 million MNP (Mobile Number Portability) requests made in June 2021. Since Vi lost a lot of subscribers and Airtel and Jio added a ton, it is only clear that Vi’s subscribers have started porting to the networks of other private operators.
Bharti Airtel might be anticipating a ton of 2G subscribers’ addition in case Vi goes out of the market. Further, the deteriorating image of Vi is helping Airtel and Jio add even more customers.