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Bharti’s $3 billion fundraising settles viability concerns

“The directors have concluded that the previously highlighted material uncertainty around the (Bharti) Group’s ability to continue as a going concern no longer exists, and that the Group has adequate committed and non-committed facilities to operate as a going concern,” Bharti unit Airtel Africa said in its December quarter earnings report.

ET Bureau|
Last Updated: Jan 28, 2020, 11.36 PM IST
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“With Bharti raising $2 billion equity, management has now stated that this uncertainty no longer exists,” the brokerage added.
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Kolkata: Bharti Airtel’s $3 billion (`21,240 crore) fundraising exercise has eliminated concerns over viability as it’s now better equipped to pay statutory dues.

“The directors have concluded that the previously highlighted material uncertainty around the (Bharti) Group’s ability to continue as a going concern no longer exists, and that the Group has adequate committed and non-committed facilities to operate as a going concern,” Bharti unit Airtel Africa said in its December quarter earnings report.

The money raised through an issue of shares and overseas convertible bonds had “reduced the level of uncertainty” over Bharti Airtel’s ability to pay adjusted gross revenue (AGR) dues following a Supreme Court order in October last year. Bharti Airtel needs to pay over Rs 35,500 crore to the government in licence fees, spectrum usage charge (SUC), penalties and interest as a result.

Bharti Airtel had raised doubts over its viability while posting an unprecedented Rs 23,045 crore loss in the July-September quarter, after provisioning for the AGR dues. Its concerns at the time centered around whether it would be able to raise funds on favourable terms.

To be sure, the telco has also been seeking relief on the dues. It first filed a review petition against the top court order widening the definition of AGR to include non-core items, which was rejected on January 16. The telco has since filed a modification petition in the apex court, pleading that it be allowed to negotiate with the telecom department on the timelines and modalities of the payment.

With the Supreme Court agreeing to hear the application, Bharti Airtel didn’t repay its dues by the January 23 deadline. Vodafone Idea and Tata Teleservices, which have also filed modification petitions, didn’t pay either.

Brokerage IIFL Securities said Airtel Africa has $2.7 billion of bonds guaranteed by Bharti Airtel maturing in 2023. After the October ruling, Airtel Africa had on its July-September earnings call flagged the risk that it could result in $505 million of Airtel Africa’s notes (maturing in 2023) having to be prepaid to prevent breach of covenants for Bharti.

“With Bharti raising $2 billion equity, management has now stated that this uncertainty no longer exists,” the brokerage added.

Airtel shares closed 4.55% lower at Rs 490.9 on the BSE.

Bharti’s Africa unit posted a 27% drop in net to $90 million for the December quarter from the year earlier.
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