Bharti Airtel, India's second-largest telecom operator, is taking a significant step to cut debt and fortify its balance sheet. The company's board has approved calling the remaining ₹15,740 crore proceeds from a ₹21,000 crore rights issue, which is expected to make its balance sheet stronger.
Airtel's Rights Issue and Debt Reduction Plan
Airtel had raised around ₹5,247 crore in the first tranche of the rights issue launched in 2021. The company now plans to tap the balance 75% through additional calls at ₹401.25 per share within 36 months of the issue closure. This move is expected to help Airtel become effectively net-debt free in the near term, except for Department of Telecommunications (DoT) liabilities and finance lease obligations.
Leadership Changes and Governance
Besides the rights issue, Airtel's board has also approved a rejig of the top management. Shashwat Sharma will take over as the chief executive officer, while Gopal Vittal, the current CEO and MD, will transition to the role of executive vice chairman. Akhil Garg will become the new chief financial officer, and Soumen Ray, the current CFO, will be elevated as the group CFO.
Analysts' Expectations and Market Impact
Analysts expect Airtel's balance sheet to become stronger after deleveraging. The company is already generating around ₹15,000 crore of free cash flows every quarter, making it one of the financially strong companies in India. With the rights issue proceeds, Airtel's India operations are expected to become effectively net-debt free in the near term.
- Analysts estimate Airtel to get around ₹7,900-8,000 crore of the ₹15,740 crore rights issue proceeds from its promoters, proportionate to their shareholding.
- Bharti Telecom has a 40.47% stake in Airtel, while Singtel holds 7.49%.
Remember, this is a perspective, not a prediction. It's essential to do your own research and consider multiple sources before making any investment decisions.