Bharti Telecom raises Rs 3500 crore via commercial paper

Bharti Telecom, the holding company of Bharti Airtel, raised about Rs 3,500 crore via commercial paper that offered 6.16 percent on average with a three-month maturity.

The money raised, tapping cheaper funding avenues, will be used to refinance existing loans and meet working capital needs, experts said.

“These are routine treasury activities by Bharti Telecom to manage rates and refinancing of its own existing portfolio,” a Bharti Group spokesperson told ET. Bharti Airtel shares fell 0.2 percent to Rs 593 at the close on the BSE on Friday.

Commercial paper, typically, is a short-term debt instrument with less than one-year maturity.

Interest rates on three-month CPs softened by 220 basis points between April 17 and May 15, according to Reserve Bank of India data. The rates may ease after the central bank cut the policy rate by 40 basis points on Friday.

Rohan Dhamija, a partner at Analysys Mason, expects “the cash raised by Bharti Telecom to primarily help address Airtel’s immediate short-term financing needs and also potentially refinance the telco’s existing debt.”

Airtel’s consolidated net debt excluding lease obligations stood at Rs 88,251 crore in the quarter ended March. Including lease obligations, debt is pegged at Rs 1,18,235 crore.

After Bharti Airtel raised over $3 billion earlier this year through a combination of qualified institutional placements and overseas convertible bonds, the combined holding of the Sunil Mittal-led telco’s promoter and promoter group is 58.98 percent.

Bharti Telecom and Singtel effectively hold 38.79 percent and 33.29 percent, respectively, in Airtel. GIC owns 2.79 percent and the remainder 25.69 percent is owned by the Mittal family.

“Bharti’s management is confident that the pandemic will have limited impact on FY21 EBITDA growth, which it forecasts to be at least 25 percent, supported by ARPU growth to Rs 170-175 a month,” India Ratings said in a note Thursday.

Analysts expect Bharti Airtel to return to profit by the end of December, after a year of losses, driven by strong operational metrics such as average revenue per user (ARPU), which could get a boost from likely tariff increases and addition of 4G customers.

Operationally, Airtel’s India business has continued to grow.

March quarter revenue from local mobile services rose 22 percent on-year to Rs 12,952.9 crore, while overall India revenue climbed 14 percent to Rs 17,438.3 crore.

—Gadgets Now