Bharti Airtel Recent Moves That Will Help It Grow Substantially

Bharti Airtel recently said that it will be raising up to Rs 21,000 crores through a rights issue which is similar to what Jio did in June, 2020. Like Jio, Airtel has asked the subscribers to pay only 25% of the money on application.

Highlights

  • Bharti Airtel recently said that it will be raising up to Rs 21,000 crores through a rights issue
  • Bharti Airtel is following similar strategies as that of Reliance Jio
  • With the rights issue helped by other measures including a tariff hike, Airtel is looking to reduce its debt to EBITDA ratio

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Bharti Airtel

Bharti Airtel is following similar strategies as that of Reliance Jio. While both telcos have different ways of acquiring customers, their corporate structure, as well as way of doing business, is pretty similar. For example, Bharti Airtel last year changed its corporate structure wherein the telco shifted all of its digital assets and businesses, including Wynk Music, Mitra Payments, Airtel Xstream, Airtel IQ, Airtel Thanks, and Airtel Secure, under one subsidiary called Airtel Digital. While at the same time, the telco moved all the broadband, mobile network, DTH business and enterprise business under a newly carved out subsidiary called Airtel Ltd.




This is very similar to that of Jio’s structure, where Jio Platforms holds all the key digital platforms, including JioNews, JioSaavn, JioTV, and JioCinema. Note that Reliance Jio is controlled by Jio Platforms.

The reason why the telcos have segregated their networks business and digital consumer business is to avoid paying adjusted gross revenue (AGR) dues to the government on non-telecom revenues. It is worth noting that the government today redefined AGR dues and said the AGR dues would not be calculated on non-telecom revenues. There are more similarities between the two companies.

Bharti Airtel Going the Jio Way With Rights Issue

Bharti Airtel recently said that it would be raising up to Rs 21,000 crores through a rights issue which is similar to what Jio did in June 2020. Like Jio, Airtel has asked the subscribers to pay only 25% of the money on an application. The rest of the money can be paid in two different instalments. Airtel is giving subscribers to pay the remaining amount in 36 months, while Jio had given 17 months.

Both Jio and Airtel promised to pay and subscribe to the leftover/unsubscribed portion of the issue, which means the issue had a solid backing in Jio’s case, and the same will be in Airtel’s case.

With the rights issue helped by other measures, including a tariff hike, Airtel is looking to reduce its debt to EBITDA ratio. The same move was played by Reliance Jio. Mukesh Ambani, Managing Director and Chairman of Reliance Industries Limited (RIL) had said in 2019 that he is looking to make Reliance a debt-free company in 18 months. As a matter of fact, he was able to do that much faster.

The cases mentioned above are clear indicators that while Bharti Airtel likes to create a unique and premium brand for itself in the market.

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