InvestorQ : What is the idea of Bharti Airtel’s latest plan to raise Rs.7500 crore in the global bond market?
Rutuja Nigam made post

What is the idea of Bharti Airtel’s latest plan to raise Rs.7500 crore in the global bond market?

Answer
image
2 weeks ago
Follow

Bharti Airtel has appointed investment bankers to assist them in raising a sum of Rs.7,500 crore through issue of overseas bonds. That is a tad over $1 billion in dollar terms. The bond sale is expected to be launched either over this week end or in the first week of March. The details of the yield on these bonds and the spread over LIBOR will be clear in the next few days.

Why does Bharti Airtel need so much of funds at this point of time? To begin with, Bharti will use these funds to build a war-chest in a highly competitive market as it needs cash at this juncture to buy spectrum in the upcoming 4G auctions announced by the government. Bharti also needs to invest in networks to improve the quality of voice and data, which had been put off in the past. Of course, Bharti also needs to gradually clear its statutory dues.

The structure of this bond raising will work something like this. These overseas bonds will be raised by Airtel’s Mauritius arm and guaranteed by Bharti Airtel due to the size of its balance sheet and its global standing. It may be recollected that in the Dec-20 quarter, Bharti Airtel had turned around to report a net profit of Rs.854 crore after reporting 6 straight quarters of net losses. Bharti was supported by gains on sale of towers business and better ARPUs.

2 Views