Singtel associate Bharti Airtel launches $4b in share, bond sale to pay massive fine

Bharti Airtel is looking to issue shares worth US$2 billion via a qualified institutional placement with a floor price of 452.09 rupees per share.
Bharti Airtel is looking to issue shares worth US$2 billion via a qualified institutional placement with a floor price of 452.09 rupees per share.PHOTO: REUTERS

SINGAPORE (THE BUSINESS TIMES) - Bharti Airtel has proposed to raise up to US$3 billion (S$4.05 billion) from a mix of debt and equity, which will enable it to pay a hefty fine as well as finance capital expenditure.

The Indian associate telco of mainboard-listed Singtel is looking to issue shares worth US$2 billion via a qualified institutional placement with a floor price of 452.09 rupees per share, according to Singtel's bourse filing on Thursday morning (Jan 9).

The actual issue price will be determined by Airtel in consultation with the appointed book-running lead managers. The preliminary placement document was filed on Wednesday.

Meanwhile, Airtel is also planning to issue up to US$1 billion in foreign-currency convertible bonds. Fitch Ratings has assigned a BBB-/RWN rating to the proposed bond sale.

The capital raising exercise comes as the phone carrier has to fork out billions of dollars in statutory dues to the Indian government by Jan 24, as mandated by the Supreme Court of India.

On Oct 24, 2019, the court had ordered India's mobile operators, including Airtel, to pay the state a total of 920 billion rupees (S$17.39 billion) in penalties plus interest within three months. The verdict ended a protracted 14-year legal tussle over the definition of "adjusted gross revenue".

Based on the court's judgment, Airtel made a provision of about 284.5 billion rupees (S$5.38 billion) in its financial statements for the second quarter ended Sept 30, 2019. This figure accounts for the estimated licence fees and spectrum usage charges payable to the government, according to Airtel's filing on Nov 14.

Separately, the company has announced two tariff hikes - one in November and another in December last year - to end a bruising price war among the India's top three telecom players.

Airtel is a key regional associate that has weighed on shareholder Singtel's earnings and balance sheet.

Singtel shares were down four cents or 1.18 per cent to $3.35 as at the midday break on Thursday.