India’s second-largest telco is likely to engage with top global banks including Barclays and Citi later this month to decide on the preferred fundraising mode and pricing, people aware of the matter said.
Sunil Mittal-led Bharti Airtel needs to clear around ₹12,000 crore of deferred liabilities (inclusive of 10% annual interest) pertaining to spectrum buys in the 2015 auction, according to company officials.
“They (Bharti Airtel) have been intermittently making enquiries about the most cost-effective way to raise the funds and whether or not to tap the bond route…That decision hinges on whether the current environment for dollar funds is competitive enough vis-a-vis the domestic market,” a senior banker aware of the matter told ET. “In the past, sometimes they have opted for NCDs and tapped into mutual funds.” Refinancing of high-cost spectrum debt will help Airtel save on annual interest costs, fortify its balance sheet, and boost cash flows even as it rapidly expands 5G coverage and looks to offer the next-gen mobile broadband services nationally in a few months, people aware of the matter said.
“Talks between Airtel and several foreign banks will start shortly…Both sides will try to zero in on the specific financial instrument and its pricing for the proposed offshore fundraise,” one of the people cited above said.
Another person said Airtel, if required, may even tap its other available option of accessing a portion of its remaining rights issue proceeds to prepay some of its 2015 spectrum auction dues. Airtel had raised only ₹5,247 crore in the first tranche of its ₹21,000-crore rights issue two years ago, and accordingly, can access some of the balance 75% via additional calls.
At press time on Monday, Airtel did not respond to ET’s queries. Emailed queries to Barclays and Citi also remained unanswered.
Airtel shares gained 1.49% to close at ₹961.4 on the BSE on Monday.
Airtel CFO Soumen Ray had said during the September quarter earnings call earlier this month that the telco still had about ₹10,000-₹12,000 crore of dues left of the 2015 spectrum auction, which it would try to pay down, going forward.
Back in the 2015 auction, Airtel had bought 111.6 MHz of spectrum for ₹29,130.2 crore, of which ₹7,832.6 crore was paid upfront. Subsequently, Airtel made two rounds of prepayments of ₹8,815 crore and ₹8,024 crore in March 2022 and end-July 2023, respectively, leveraging much lower-cost financing avenues available to cut annual interest payouts.
The last spectrum prepayment in July 2023 had marginally lowered Airtel’s net debt sequentially in the September quarter to ₹2.07-lakh crore. This was since the telco replaced high-cost spectrum debt (pertaining to the 2015 auction) with lower cost market/bank borrowings.