Bharti Airtel is exploring issuing new shares to the public or institutional investors, heralding the possible return of India's biggest telecom company to the equity markets for the first time since its high-profile public flotation of 2002.
Two persons aware of Bharti's plans said the company was examining options as part of a wider exercise to bolster finances that are weighed down by a $12.7-billion debt load.
While one person said Bharti was looking at a follow-on offer of shares and an external commercial borrowing, the second said the list of options under consideration was bigger and included a possible stock market listing of its tower arm Bharti Infratel.
"The company is looking at four options," said the second person. Both requested anonymity.
Bharti declined to comment, but the second person said the telco had tasked separate investment banks to work out each of the various options. HSBC and Standard Chartered have received the mandate for the possible share sale, which could be done either by way of a follow-on offer of shares to the public or through a placement to qualified institutional investors.
The 2002 public flotation took place at a time the company was on the verge of a major boom.
Desperate to Pare Debt Load
But this time, planning for Bharti's latest fund-raising exercise is taking place against the backdrop of slowing growth in the sector, made worse by regulatory uncertainty and legal hassles.
"The telecom sector will have to test the market as this is the only option available to them under the current circumstances. Who else will put in the money?" asked Hemant Joshi, partner at Deloitte Haskins & Sells.
Bharti, which has operations in India, South Asia and Africa, desperately needs to pare its debt burden, which was acquired largely to fund its 2010 purchase of the African operations of Kuwait's Zain for an enterprise value of $10.7 billion. At that time, Bharti had taken some $9 billion of debt on its books and loaded the remainder on Zain's books.
The company's debt load vaulted to $13.43 billion in 2011 from just $530 million in 2010 following the Zain acquisition and after it borrowed another $2 billion to pay for third-generation mobile spectrum.
The Sunil Mittal-promoted company, which is 32.5% owned by Singapore's SingTel, is now staring at the prospect of several big-ticket expenses, which analysts say make fund-raising an imperative.
"Bharti will require a lot of funding over the next 12 months and banks are no longer eager to lend as they have over $20 billion exposure to the sector," said Jaideep Ghosh, partner at KPMG.
The company will need to keep aside thousands of crores if it decides to take part in an upcoming auction of 2G spectrum. It may also need to shell out several billions of dollars if the government implements a plan, already cleared by a panel of ministers, to refarm airwaves, an exercise that involves redistribution of airwaves in the more efficient 900 MHz frequency band and substituting it with frequencies in the 1800 MHz band.
Two persons aware of Bharti's plans said the company was examining options as part of a wider exercise to bolster finances that are weighed down by a $12.7-billion debt load.
While one person said Bharti was looking at a follow-on offer of shares and an external commercial borrowing, the second said the list of options under consideration was bigger and included a possible stock market listing of its tower arm Bharti Infratel.
"The company is looking at four options," said the second person. Both requested anonymity.
Bharti declined to comment, but the second person said the telco had tasked separate investment banks to work out each of the various options. HSBC and Standard Chartered have received the mandate for the possible share sale, which could be done either by way of a follow-on offer of shares to the public or through a placement to qualified institutional investors.
The 2002 public flotation took place at a time the company was on the verge of a major boom.
Desperate to Pare Debt Load
But this time, planning for Bharti's latest fund-raising exercise is taking place against the backdrop of slowing growth in the sector, made worse by regulatory uncertainty and legal hassles.
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Bharti, which has operations in India, South Asia and Africa, desperately needs to pare its debt burden, which was acquired largely to fund its 2010 purchase of the African operations of Kuwait's Zain for an enterprise value of $10.7 billion. At that time, Bharti had taken some $9 billion of debt on its books and loaded the remainder on Zain's books.
The company's debt load vaulted to $13.43 billion in 2011 from just $530 million in 2010 following the Zain acquisition and after it borrowed another $2 billion to pay for third-generation mobile spectrum.
The Sunil Mittal-promoted company, which is 32.5% owned by Singapore's SingTel, is now staring at the prospect of several big-ticket expenses, which analysts say make fund-raising an imperative.
"Bharti will require a lot of funding over the next 12 months and banks are no longer eager to lend as they have over $20 billion exposure to the sector," said Jaideep Ghosh, partner at KPMG.
The company will need to keep aside thousands of crores if it decides to take part in an upcoming auction of 2G spectrum. It may also need to shell out several billions of dollars if the government implements a plan, already cleared by a panel of ministers, to refarm airwaves, an exercise that involves redistribution of airwaves in the more efficient 900 MHz frequency band and substituting it with frequencies in the 1800 MHz band.
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