Bharti Airtel is considering raising about $1 billion (approximately Rs 8,330 crore) along with offshore bonds. The funds would be used to prepay a significant portion of the outstanding dues associated with the spectrum acquired during the 2015 auction, according to a report by the Economic Times.
The second-largest telecos company, led by Sunil Mittal, in India is expected to collaborate with leading global banks, including Barclays and Citi, later this month. The aim is to determine the preferred method of fundraising and establish pricing details, as per sources cited in ET.
The company is facing an imperative of settling approximately Rs 12,000 crore in deferred liabilities, inclusive of a 10 per cent annual interest. Company officials stated that these liabilities are associated with the spectrum acquisitions made in the 2015 auction.
Airtel's refinancing of high-cost spectrum debt is set to reduce annual interest costs, bolster its balance sheet, and boost cash flows. This comes as the company rapidly expands 5G coverage and gears up to launch next-gen mobile broadband services nationwide in the coming months, sources report.
In the recent earnings call for the September quarter, Airtel's CFO Soumen Ray stated that the telecom company still holds outstanding dues of approximately Rs 10,000-12,000 crore from the 2015 spectrum auction. Airtel aims to gradually settle these dues as part of its ongoing efforts.
The company acquired 111.6 MHz of spectrum at a cost of Rs 29,130.2 crore. Initially, Rs 7,832.6 crore was paid upfront, followed by two additional payments of Rs 8,815 crore in March 2022 and Rs 8,025 crore in July 2023.
Airtel's net debt for the September quarter was marginally reduced to Rs 2.07-lakh crore due to the last spectrum prepayment in July 2023. This reduction occurred as the telecommunications company replaced expensive spectrum debt related to the 2015 auction with more cost-effective market/bank borrowings.