Bharti Airtel in a release said that a meeting of the Board of Directors is scheduled for August 29 to consider fundraising.
“A meeting of the board of directors of the company is scheduled on August 29, 2021, to consider various capital raising options,” the company said in the release.
The board members are planning to raise capital via equity or equity-linked debt instruments or combination of the aforementioned through a rights issue, qualified institutions placement, preferential issue, convertible instruments issued domestically or foreign currency convertible bonds, or warrants on a preferential or marketed basis, or straight long-dated debt in rupee or foreign currency or any other mode including any combination thereof, it added.
The capital raising announcement was sudden for investors since it is intended to increase capacity in anticipation of substantial market share movements that may be viewed favourably.
Telecom’s net debt for the quarter ending June was around Rs 1.6 lakh crore from approx Rs 1.5 lakh crore in the previous quarter, and the net debt to EBITDA ratio stood at somewhat three times, but industry analysts found it ‘comfortable’.
Most brokerages have a ‘Buy’ call for the stock. CLSA has kept the target price of Rs 730, while Goldman Sachs aims at Rs 675 and Jefferies at Rs 685.
As per Goldman Sachs, Airtel needs to pay Rs 4,100 crore in AGR dues by March 2022, and spectrum payments worth Rs 8,500 crore are also due coming FY23.
Apart from this, Airtel will need to aggressively keep investing in expanding and deepening its 4G network as it is involved in a bitter fight with Reliance Jio for financially trembling Vodafone Idea’s subscribers.
The investment banker added that Airtel may face “an annual cash shortfall of at least Rs 2,000 crore ($270 million) if tariffs stay at current levels,” In FY23, quoted Economic Times.
The carrier for the next auctions which is likely to be placed in early 2022 has to be financially ready as it will involve the sale of 5G airwaves and delivering next-gen services.
As per the publication, Bharti Chairman Sunil Mittal in June said that Airtel has raised $12 billion in the last 2 years. But, also hinted that there is no rush for raising fresh capital.
During early trading hours, Bharti Airtel was quoting a high of Rs 591.50 and opened at Rs588.80, up 0.32% on Friday, on NSE.
On Thursday, the stock opened at Rs 610 but closed at Rs 586.90 with a decline of 4.17%.
On Aug 16, 2021, the share price reached a 52-week high of Rs 644 and a 52-week low of Rs 394.05 was marked on 19 October 2020.