Bharti Airtel is the second-largest telecom operator in India. The telco has seen its share of highs and lows. But it has survived through everything because of the brand it has built, and leveraging the same brand; the telco has been able to raise capital on multiple occasions. If you are wondering why Bharti Airtel is raising capital through a rights issue when the company is already profitable, has cash in the bank, and doesn’t need urgent money, here’s what you should know.
Bharti Airtel Raising Cash to Invest in 5G, FTTH, Enterprise Business
While the telco is profitable, there’s still plenty of room to grow. Now, there are other ways Airtel could have raised additional capital. The reason why the board went with the decision of rights issue is to not get any further debt. In the company’s investor call, Sunil Bharti Mittal, Founder and Chairperson, Bharti Enterprises, said Airtel didn’t go for any further debt because it is conscious of the current leverage ratio. With any additional debt on the company, Airtel’s leverage ratio would have become bad. That’s why the company went with the decision of rights issue. Mittal explained that Airtel would be using the money to invest in rolling out 5G. The 5G spectrum auctions are expected to take place next year, and the company plans to roll out the networks in key cities as early as possible. As per Mittal, as more time passes by, the market will have more 5G enabled handsets which will be a fruitful thing for the companies. Bharti Airtel also plans to invest aggressively in its fibre so that it can prepare well for the 5G rollout and also provide greater fiber broadband access to the homes around India. Lastly, Mittal said, the additional capital will help Airtel invest in its enterprise business which includes data centres. All of these investments from the company will put Bharti Airtel in a very strong position in the coming months.
