Bharti Airtel looks to raise funds in Europe for spectrum auction

New Delhi: India’s largest telecom service provider, Bharti Airtel Ltd, is looking at raising as much as $1 billion by selling bonds to European investors to shore up its coffers before the much-awaited spectrum auction in January, The Economic Times reported on Tuesday.
The bond issue will be the third such for the world’s fifth largest telco, together raising a total of around $3-4 billion. The funds raised could also be used to buy smaller operators post the new merger and acquisition policy, expected to be approved by the cabinet this month.
Bharti Airtel has given the mandate to five banks—JPMorgan, Barclays, UBS Investment Bank, Standard Chartered and BNP Paribas—as joint book runners and lead managers for the bond issue.
Bharti Airtel declined to comment. People with knowledge of the development said that the Netherlands stock exchange had been informed that Barclays, Standard Chartered, UBS, BNP Paribas and JPMorgan will set up meetings to gauge interest in Bharti’s euro denominated bond sale for as much as $1billion. They also said that it was unlikely that a final decision on the term of the bonds had been taken as yet.
The investor meetings are expected to begin on 27 November. The Economic Times cited unnamed people familiar with the matter saying that the money would be used to refinance its existing high-interest debt, mainly incurred acquiring Kuwait based Zain’s Africa telecom assets in 17 countries.
In July, Bharti announced that it had retired equivalent debt from the proceeds (Rs.6,796 crore) of the preferential allotment in June 2013 of 5% equity shares in Bharti Airtel to the Qatar Foundation Endowment. In June 2013, Bharti had issued 199,870,006 new equity shares, representing 5% equity stake in the company, to Qatar Foundation Endowment.Simultaneously, the company is also looking at divesting and selling stake in its DTH (direct to home) and enterprise businesses.
The January auction is crucial for Bharti as the telco will see its licences in the lucrative Delhi, Mumbai and Kolkata circles expire in November next year. The auction is necessary for the telco to retain its 900 MHz spectrum in these circles—a key differentiator for the company in the highly competitive telecom business. The strengthened balance sheet would also help Bharti compete with Mukesh Ambani’s Reliance Jio, that is expected to launch its fourth generation based wireless communications services soon.