Bharti Airtel founder-chairman Sunil Mittal on Monday said that the company will not shy away from raising tariffs, a day after the telco announced its plans to raise up to ₹21,000 crore via a sale of shares to existing shareholders as it builds a war chest to prepare for the launch of 5G services.
During the investor call, Mittal also added that the company’s debt is at an ‘extraordinary’ level. Leverage is bothering investors and the company, he added. He also expects levies and loads on the telecom industry to be brought down.
The telecom major’s stock on BSE rose over 5% at ₹625 apiece at the closing time owing to the chairman’s announcements.
To be sure, the Bharti group has already paid ₹18,004 crore in AGR-related dues to DoT by March 31, 2021 which is much more than 10% of its total AGR dues of over ₹43,000 crore.
Earlier this month, the Supreme Court had directed DoT not to invoke the bank guarantees (BGs) of Bharti Airtel for three weeks for recovering ₹1,376 crore in AGR-related dues of Videocon Telecom Ltd (VTL), which had sold its spectrum to the Bharti group.
The top court, which refused to entertain Airtel’s plea that VTL dues are not payable by it, permitted the telecom major to approach the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) with the grievances.
Mittal said the industry has been urging the government to address some pressing issues “inhibiting” continued investments in the sector and added that the taxes on the industry remain high.
“For every ₹100 of revenue, ₹35 go in various forms of levies. We hope that as we step up and do our part, the government will also favourably look at some of the genuine demands of the industry, enabling a multiplier effect and positive outcome,” Mittal said in an investor call on the company’s fundraising plans.
Airtel “has the opportunity to be the tip of the spear for the new digital economy and take India into the next phase of growth”, he added. The investments would be channelised in areas like 5G, fibre, and data centre business, he said. The capital raise will give the company the “fuel to grow” and “go extra mile” to leverage opportunities that are “around the corner”, he said. “This capital will help improve the leverage position for the company and simultaneously provide the fuel to accelerate investments across several parts of our portfolio to drive for competitive and profitable growth,” Mittal said.
The telecom czar further estimated that the industry’s ARPUs (Average Revenue Per User) would reach ₹200 per user per month by the end of the current financial year and eventually move to ₹300.
Further today, in terms of 5G connectivity status in India, Mittal feels 5G will become a reality in H2 next year. Mittal said, “We hope that the spectrum pricing auction will be made attractive.”
Telecom operator Bharti Airtel’s board on Sunday approved raising up to ₹21,000 crore by way of rights issue, at a price of ₹535 per share, according to a regulatory filing. However, Mittal added that the telco will not use rights issue fund to increase stake in Indus Towers. He also said that any delay in fundraising could have been detrimental for the company.
The mega fundraising is bound to give more firepower to Airtel, as the company takes on rivals in the fiercely-competitive Indian telecom market.
Airtel’s board, which met to consider the company’s capital raising plans, cleared the rights issue price of ₹535 per fully paid-up equity share, including premium of ₹530 per equity share.
In a BSE filing, Airtel said that the “…board approved the issuance of equity shares of face value of ₹5 each of the company on rights basis to eligible equity shareholders of the company as on the record date (to be notified later), of an issue size of up to ₹21,000 crore”.
A rights issue is an offer to existing shareholders to buy additional new shares in the company.
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