The Bharti Airtel will initiate a series of meetings with venture capitalists and private equity investors, starting Wednesday, to discuss options to raise funds through Euro bonds as it readies for the forthcoming spectrum auctions and tries to refinance existing high-interest debt. The country?s largest telecom player may also use the funds to buy out smaller operators following the new merger and acquisition policy, expected to be approved by the government shortly, said industry sources.
Reports suggest that Bharti’s Euro-denominated bonds could raise up to $1 billion. The bond issue will be the third such for the world?s fifth largest telco, raising a total of around $3-4 billion.
According to people with knowledge of the issue, Bharti Airtel has given the mandate to five investment banks ? JPMorgan, Barclays, Deutesche Bank, UBS Investment Bank, Standard Chartered and BNP Paribas ? as joint book runners and lead managers for the bond issue.
?The investor meetings are expected to begin on 27 November,? according to information given to the Netherlands stock exchange.
Bharti Airtel declined to comment.
Ratings agency Moody?s Investors Service on Tuesday assigned Baa3 to the proposed senior, unsecured Euro-denominated notes issued by Bharti Airtel International (Netherlands) BV.
“Bharti’s Baa3 rating is underpinned by its receipt of strong and growing cash flows from its Indian operations, particularly in wireless, where it enjoys a well-established and leading market position under the Airtel brand,” said Laura Acres, a Moody’s senior vice- president.
“At the same time, concerns exist regarding its exposure to the risk of changes to the regulatory and political environments in some of the countries in which it operates, especially after its 2010 investment into 15 (now 17) African countries,” added Acres, also Moody’s lead analyst for Bharti.
Analysts said the money could be used to refinance Bharti’s existing high-interest debt, mainly incurred in acquiring Kuwait-based Zain?s Africa telecom assets in 17 countries. Bharti’s net debt stood at R60,877 crore ($9.69 billion) at the end of the September quarter, with a net debt-to-Ebitda ratio of 2.18.
In July, Bharti announced that it had retired equivalent debt from the proceeds (R6,796 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.
Industry experts said the company could be shoring up its coffers to bid aggressively in the upcoming auctions. The January auction is crucial for the telco as its licences in the lucrative Delhi and Kolkata circles would expire in November next year. The auction is necessary for Bharti to retain its efficient 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, which is expected to launch its fourth-generation wireless communications services soon.
