Bharti Airtel is planning several measures to reduce its USD 14.6 billion debt by USD 4.6 billion over the next three years in a bid to keep its investment-grade ratings, Bloomberg reported, citing sources close to the matter. To achieve this goal, the company will try and raise up to USD 1.5 billion by listing a quarter of the equity in its African unit. It hopes to list the assets by the start of next year, either in London or South Africa. The company will also look to sell part of its tower operations.
Following reports in the Indian press earlier this month about a possible African IPO, Bharti Airtel said that it had decided in February to consider listing the African unit. The company said discussions with banks were still at an earlier stage.
The company has borrowed money to buy spectrum and to defend its position against Reliance Jio Infocomm. Combined with an eight-quarter stretch of earnings declines, the ballooning debt has put Bharti Airtel at risk of a downgrade to junk at both Moody’s Investors Service and S&P Global Ratings. The sale of part of all of the tower business will likely take place in a year, to meet the timeline target imposed by Moody’s to keep the credit at Baa3, which is the lowest investment grade rating.
Bankers for the listing of Bharti Airtel’s Africa unit will be appointed by September, one source said. The unit will house about USD 2.3 billion of debt, putting its enterprise value to USD 8.3 billion.
Another source said the company will have to spend USD 3.6 billion (INR 240 billion) in the year to March to provide 4G services across India and expand broadband, as it continues to compete with Jio. The company invested INR 250 billion in the previous fiscal year.
Bharti Airtel will also explore selling a stake to investors in its towers company, once the merger of Bharti Infratel and Indus is complete. It will own up to 37.2 percent in the new entity that will control more than 163,000 towers across India. In addition to the merger, it has recently separated submarine cable and other network assets into subsidiary companies.