Bharti Airtel launches Qualified Institutional Placement worth $2 billion

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Telecom major Bharti Airtel launched a Qualified Institutional Placement (QIP) worth $2 billion as well as an issue of foreign currency convertible bonds (FCCBs) upto $1 billion.

According to Bharti Airtel’s stock exchange filings on Wednesday, the QIP issue will be offered at a floor price of Rs 435 per share while the FCCB issue will be used for “capital expenditure, repayment of existing indebtedness, and/or any other use, each as permitted under applicable laws and regulations from time to time”, Airtel said. FCCBs are debt instruments denominated in a foreign currency, which may later be converted to shares.

The move comes even as the telecom major faces liabilities of as much as Rs 35,586 crore arising from the Supreme Court’s October verdict on adjusted gross revenue (AGR). The apex court had decided in favour of the government’s definition of AGR and held that it should include non-telecom revenue of companies too.

Major levies like license fee and spectrum usage charges are decided based on AGR and the apex court has directed companies to pay pending dues to the Centre’s Department of Telecom (DoT) by January 24.

The large provisioning requirements needed for such a payout had pushed the company into its largest quarterly loss of Rs 23,045 crore during the second quarter of the current financial year. Bharti Airtel owes the DoT Rs 21,682 crore in licence fee and another Rs 13,904.01 crore in spectrum usage charges.

The company’s board of directors had, in early December, decided that it would raise $2 billion through instruments like qualified institutional placement, compulsory convertible debentures or other convertible securities,ADR (American depositary receipts) and GDR (global depositary receipts).

Another $1 billion would be raised through FCCBs, the telecom major had said. The telecom major also plans to raise $1 billion through the issue of foreign currency convertible bonds (FCCBs) or other similar securities in foreign currency.

According to government data, the liabilities in the case of Airtel add up to nearly Rs 35,586 crore, of which Rs 21,682 crore is licence fee and another Rs 13,904.01 crore is the SUC dues (not including the dues of Telenor and Tata Teleservices).

QIP to be offered at floor price of G435

Qualified Institutional Placement issue will be offered at a floor price of J435 per share while the FCCB issue will be used for “capital expenditure, repayment of existing indebtedness, and/or any other use, each as permitted under applicable laws and regulations from time to time”, it said. FCCBs are debt instruments denominated in a foreign currency, which may later be converted to shares