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Airtel promoters sell 2.75% stake worth $1B to clear debt

The Indian operator has improved its balance sheet position with the sale of a stake in its business.

Gagandeep Kaur

May 27, 2020

2 Min Read
Airtel promoters sell 2.75% stake worth $1B to clear debt

Bharti Telecom, the holding company of Bharti Airtel, India's third-largest service provider, has this week sold 152 million shares in a block deal worth around INR85 billion ($1.12 billion).

The move reduces Bharti Telecom's stake in Airtel to 36% from 38.8% before the stake sale. The combined 58.9% promoter holding of the Sunil Mittal family and SingTel has now come down to 56%.

Bharti Telecom was able to get a good price for its stake sale because Airtel recently announced a 14% jump in average revenue per user in its recent quarterly results, which led to a surge in its share price.

Airtel had also issued a INR250 billion rights issue in March earlier this year. This month, Bharti Telecom raised INR35 billion ($462.7 million) through commercial paper, a short-term debt instrument. (See Airtel's latest results are a pleasant surprise and Record funds for Indian telcos could signal revival.)

The funds are likely to be used by Airtel to clear debt. Being debt-free will help the operator to improve its credit ratings and in turn attract funding. Bharti Telecom currently has a debt of around $1 billion, while Airtel's net debt stood at INR882.5 billion ($11.6 billion) at the end of March 2020, down from INR1 trillion about a year ago.

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The Airtel move comes after arch-rival Reliance Jio raised more than $10 billion by selling stakes to several investors, including Facebook, Vista, General Atlantic, KKR and Silver Lake.

More funding for Airtel could help it to put up a stronger fight against Jio and also expand and transform its network for a better customer experience. It has recently awarded a gear contract worth $1 billion to Nokia as well as a telco cloud deal to IBM-Red Hat.

— Gagandeep Kaur, contributing editor, special to Light Reading

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About the Author(s)

Gagandeep Kaur

Contributing Editor

With more than a decade of experience, Gagandeep Kaur Sodhi has worked for the most prominent Indian communications industry publications including Dataquest, Business Standard, The Times of India, and Voice&Data, as well as for Light Reading. Delhi-based Kaur, who has knowledge of and covers a broad range of telecom industry developments, regularly interacts with the senior management of companies in India's telecom sector and has been directly responsible for delegate and speaker acquisition for prominent events such as Mobile Broadband Summit, 4G World India, and Next Generation Packet Transport Network.

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