Bharti Airtel to raise Rs 21,000 cr via Rights Issue

Bharti Airtel Ltd has decided to raise Rs 21,000 crore ($2.87 billion) through a rights issue to its shareholders, as the telecom operator seeks to create a capital cushion and take on deep-pocketed rival Reliance Jio Infocomm Ltd.

Bharti Airtel will allot the shares in the rights issue at Rs 535 apiece. That’s a discount to the prevailing market price. The company’s shares climbed as much as 2.6% Monday to touch Rs 609.25, before paring the gains.

The company said eligible shareholders can purchase one share for every 14 shares held as on the record date. The promoter and promoter group of the company will collectively subscribe to the full extent of their aggregate rights entitlement. In addition, they will subscribe to any unsubscribed shares in the issue.
Bharti Airtel’s promoter group comprises Bharti Telecom Ltd, which is controlled by billionaire Sunil Bharti Airtel, and Singapore Telecom (Singtel). The promoters own a total of 55.86% stake in Bharti Airtel. 
The company’s institutional shareholders include a couple of mutual funds, ICICI Prudential Life Insurance Company and Singapore sovereign wealth fund GIC Pte. Ltd.

The company said the shareholders will have to pay 25% of the amount at the time of the application and the balance in two more additional calls as and when required within 36 months. This indicates the company doesn’t require the entire amount in the short term and is raising the capital to defend or gain market share in the wake of stiff competition from Reliance Jio and to make investments for the upcoming 5G technology upgrade.

Bharti Airtel has so far managed to defend against Jio’s brutal price war that led to the shutdown of most telecom companies since 2016. It has also paid part of the amount due to the government on account of Adjusted Gross Revenue (AGR), which has pushed Vodafone Idea Ltd on the brink of bankruptcy.