Bharti Airtel to Sell 32% Stake in Bharti Infratel

Indian operator Bharti Airtel has decided to sell a further 32% stake in Bharti Infratel, valued at close to Rs 15,500 crore, to create a war chest to bolster its countrywide 4G networks and counter Reliance Jio Infocomm.

Separately, the Sunil Mittal-led telco on Thursday also appointed a panel to explore various other fundraising options, and named Badal Bagri as its CFO effective March 1.

Bagri will replace global CFO Nilanjan Roy, who has resigned to join technology major Infosys.

The Airtel board has “approved the sale/transfer of up to 591.87 million equity shares (32%) of Bharti Infratel, to its wholly-owned subsidiary, Nettle Infrastructure Investments Ltd, to explore a potential monetisation of its (Bharti) Infratel stake, subject to the approval of shareholders,” India’s second-largest phone company said in a regulatory filing on the Bombay Stock Exchange (BSE) on Thursday.

Post-transfer of the shares, Airtel’s direct holding in Bharti Infratel will drop to 18.33% from 50.33% while Nettle Infra Investments’ holding will rise to 35.18% from 3.18%.

At Infratel’s closing stock price of Rs 261 on BSE on Thursday, the parent company can garner nearly Rs 15,450 crore from the stake sale.

Bharti Infratel is in the process of merging Indus Towers with itself. Insiders though said the Infratel stake sale by Airtel is likely post-closure of the Indus-Bharti Infratel merger, which in turn, would lead to changes in the ownership structure of the combined tower entity. The new entity will be co-owned by Vodafone Idea.

“Given the big strides that Jio has made in cornering revenue market share and customers from the incumbents in the September quarter, Airtel is clearly trying to defend turf by building a war chest to fight the Mukesh Ambani-led telco,” said Rohan Dhamija, head of India & Middle East at telecom and media consulting firm Analysys Mason.

“The towers business is a relatively stable one, which is why the planned Infratel stake monetisation can generate the requisite cash for Airtel to deploy in its struggling core telecom business in India,” Dhamija said.

Bharti Infratel shares fell just over 1% on BSE on Thursday whereas Airtel’s scrip dropped nearly 2% to close at Rs 316.15.

Over the past 21-odd months, Airtel has been raising funds by progressively reducing its stake in its listed tower unit to cut debt and free up cash to gird up for competition with Jio in the fiercely competitive 4G turf. It has already raised well over Rs 12,000 crore through multiple stake dilutions. But in March this year, the company said it might sell a much larger stake in its tower arm to fund 4G expansion plans.

In a separate exchange filing, Airtel said its board had formed and authorised “a special committee of directors to comprehensively explore/evaluate various fundraising options to strengthen the company’s capital structure and balance sheet”.

ET had reported in its November 28 edition that Airtel planned to raise Rs 12,000-15,000 crore to create a war chest to cut debt and meet 4G capex needs, and that the telco was examining the option of either a rights issue to existing shareholders or a private placement to institutional investors and promoters.

Airtel’s consolidated debt is upwards of $15 billion, or about Rs 1,05,000 crore.

Airtel’s Infratel stake sale and fundraising plans come on the heels of its Africa arm raising $1.25 billion, or about Rs 9,200 crore, last month by concluding a placement of shares to six global investors, including Warburg Pincus, Temasek, Singtel and SoftBank Group. This will be followed by Airtel Africa’s initial public offer (IPO) around May-June next year, through which the telco plans to raise additional $1.25-1.5 billion.