‘Bharti Telecom will need to raise debt to fund its Airtel stake buy’

Kolkata: Bharti Telecom, a key promoter company of , will need to raise debt to fund the purchase of a 3.33% stake in the Indian telecom operator for $1.61 billion (about ₹12,900 crore) from Singtel, said.

This is since Singtel has ruled out any fresh equity infusion in Bharti Telecom, the brokerage said. The Mittals of Bharti Enterprises and Singtel own 50.56% and 49.44%, respectively, in Bharti Telecom.

IIFL also does not expect Singtel to sell any further stake in Airtel.

“Singtel ruled out any equity infusion in BTL (Bharti Telecom), and thus BTL has to raise debt to fund this transaction,” IIFL Securities said in a note to clients. It, though, said future dividend payouts from Airtel should keep BTL’s debt/leverage under check.

BTL has not yet elaborated on how it plans to fund the stake buy.

Analysts said BTL’s near ₹12,900 crore fund requirement was less than 10% of the value of its stake in Airtel. At present, BTL owns 35.4% of

, which values its stake at almost ₹1.44 lakh-crore based on the telco’s market capitalisation of over ₹4.06 lakh-crore.

IIFL estimates that post-conclusion of the Singtel deal, BTL’s debt would rise to ₹15,500 crore and its participation in future calls for Airtel’s rights issue (by late-2024) would entail another ₹6,000 crore. While Singtel’s management said BTL’s debt even after the stake acquisition would remain manageable, some analysts remain sceptical.

“In the absence of BTL’s own cash inflows (as Airtel does not yet pay dividends), the ability of BTL to service the debt remains a question,” said UBS in a note.