No debt relief' in sight for Bharti Airtel

New Delhi: Faced with falling profits and intense competition in the home market, Sunil Mittal’s Bharti Airtel is weighing various options to pare its Rs 96,000-crore debt.

A possible listing of its profitable Africa unit next year and selling stake in the tower business after Bharti Infratel merges with Indus Towers are some of the options being considered by the telco.

But analysts said these would not offer much cash to help the company’s debt control programme, as the debt has already become mammoth. Besides, the company will need huge capital expenditure to match rival Jio Infocomm’s spending. Even if the company lists its African unit, the valuations would not be strong enough offer.

Sources said diluting about 25 per cent stake in Bharti Airtel International Netherlands, its holding company for Africa operations, could fetch the company Rs 6,000 crore to Rs 7,000 crore.

This doesn’t amount to much considering that the company had a capex of Rs 24,000 crore in India last year. Recently, at a conference call, the company said it expected to spend a similar amount to boost its network.

“Underpinned by a strong network modernisation programme, we expect to undertake a capex of about 600 million to 700 million in Africa. Overall, total capex will continue at Rs 27,000 to Rs 28,000 crores-mark next. To enable our spends, strengthening our balance sheet and focus on debt reduction remain key priorities,” the company’s CFO had said in the Q4 analyst call.

Sources said the Africa listing could take time as the company would like to improve its financials before opting for a listing. Instead, the company might look for selling a majority stake in the merged tower entity with Indus Tower, where its own tower arm Bharti Infratel is a major shareholder. But this could also face delays as the deal is yet to have all approvals in place.

The company has not yet started looking for merchant bankers to handle the possible Africa IPO on the London Stock Exchange but some informal discussions may have taken place, said sources. Airtel declined to comment on the story.

Airtel's India operations reported its first loss in 15 years of Rs 652 crore for the January-March quarter, dragged down by the continuing price war triggered by the entry of Reliance Jio.

It managed to stave off a loss at the consolidated level due to its Africa operations, which recorded a quarterly profit of Rs 698.7 crore, a big jump from Rs 26.3 crore reported a year ago. Airtel posted a consolidated profit of Rs 83 crore, down 78 per cent year-on-year.

Recently, Bharti Infratel has agreed to merge with Indus Towers in a deal that creates the world's second biggest telecom tower company with an equity value estimated at a staggering $14.6 billion.

Bharti Airtel, the majority owner of Bharti Infratel, will be the biggest shareholder in the combined company followed by Vodafone Group Plc. Indus' two other main shareholders, Idea Cellular and Providence Equity Partners, will have an option to cash out.

Bharti Airtel had said separately that it would sound out potential investors with a view to selling stakes in the combined entity.