Bharti Airtel Ltd will strengthen its fibre infrastructure to prepare its network for launch of 5G services. (Steve Jurvetson/Flickr (CC BY 2.0))

SINGAPORE — Bharti Airtel Ltd’s planned $2.8 billion equity issuance will improve its funds from operations (FFO) net leverage to around 2 times and provide funds to strengthen its market position, as per Fitch Ratings.

Bharti will raise equity in three tranches. A quarter of the proceeds will be received upfront and the balance in two installments within three years.


Fitch said the company’s management remains committed to an investment-grade rating.

The company raised about $9 billion in the financial year ended March 2020 (FY20) and FY21 via equity issuance, selling a stake in subsidiary Airtel Africa Plc and selling and releasing towers in Africa.

“We expect wireless market leader Reliance Jio, a subsidiary of Reliance Industries Ltd (BBB/Negative), and Bharti to increase their combined revenue market share among private telcos to 80 percent-82 percent, at the expense of third-placed Vodafone Idea, which we believe may lose 50 million-70 million subscribers in the next 12 months,” said Nitin Soni, Senior Director, Corporates, Fitch Ratings in a statement.

“Vodafone Idea has lost about 180 million subscribers in the last three years, with 255 million at end-June 2021. Vodafone Idea is struggling and needs to raise new funds to pay for Capex, AGR dues and repay maturing debt.”

The management aspires to achieve a debt/EBITDA ratio of around 2 times in the long term.

Fitch forecast Bharti’s Capex to increase to about $5 billion in FY22, of which $1.5 billion is likely to be paid upfront to acquire 5G spectrum assets.

“We believe that the company will also seek to strengthen its fiber infrastructure — connecting towers with fiber and backhaul infrastructure to prepare its network to launch 5G services in 2022-23,” the company said.

“Capex on 5G infrastructure during 2022-23 will replace 4G investments as 4G coverage is largely complete.”

Fitch said it expects Bharti’s main shareholders — Bharti Telecom and Singapore Telecommunications Ltd — will collectively subscribe to their full entitlement in Bharti’s rights issue.

Bharti has paid about $2.4 billion of the total of $6.4 billion owed to India’s Department of Telecommunications in a dispute over the amount of adjusted gross revenue (AGR) dues.

“We have factored in $4 billion for AGR dues remaining in our leverage calculation, despite the Supreme Court allowing the balance to be paid over 10 years from March 2022,” the firm said.

Singtel has yet to announce its exact subscription.

“However, we estimate Singtel’s equity participation over a three-year period to be about $400 million, based on its 14 percent direct stake in Bharti,” the firm said.

Fitch said these investments underscore the strategic importance of the Indian telecoms business to Singtel.

(With inputs from ANI)

Edited by Saptak Datta and Praveen Pramod Tewari



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