Bharti Airtel plans to raise up to $1 bn; subsidiary to issue bonds

New Delhi: Bharti Airtel has initiated a massive fund raising exercise, estimated at up to USD 1 billion (about Rs 7,000 crore), via a bond issue by its subsidiary Network i2i, the proceeds of which will be used to cut debt for the telco that is engaged in a turf war in the Indian telecom market.

The mega fund raiser comes just months after the Sunil Mittal led company raised Rs 25,000 crore through a rights issue.

The telecom sector has been battered by falling tariffs, eroding profitability, and mounting debt, in the face of stiff competition triggered by disruptive offerings of Reliance Jio, owned by Mukesh Ambani.

But with the market for voice and data growing at an explosive pace and intensifying competition, telecom operators have been investing in strengthening networks, and preparing war chests to protect their turfs.

In a regulatory filing on Tuesday, Bharti Airtel announced that an "...offering of USD denominated Guaranteed Subordinated Perpetual Securities by Network i2i Limited (a direct 100 per cent subsidiary of Bharti Airtel) expected to be rated 'BB' by both S&P and Fitch may follow, subject to market conditions." Bharti Airtel has appointed a clutch of bankers including BofA Merrill Lynch, Barclays, BNP Paribas, Citigroup, HSBC, J P Morgan and Standard Chartered Bank as joint bookrunners and joint lead managers to organise a series of fixed income investor meetings and calls across Asia, Europe and the US starting Wednesday, it added.

Simply put, a perpetual bond is a fixed income security with no maturity date, that yields a steady flow of interest payments.

Airtel at the time of its rights issue earlier this year, had mentioned it would also raise additional Rs 7,000 crore through a foreign currency perpetual bond issue.

Sources said that the ensuing fundraising is likely to be in range of USD 750 million to USD 1 billion, and the final figure will be arrived at, based on market response.

The proceeds from the issue will be utilised for pruning debt of Bharti Airtel, which as on June 2019 stood at a staggering Rs 1.16 lakh crore.

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