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Bharti Telecom Ltd promoter of Airtel to sell stake of $1 billion on 26 May

Telecom company Bharti Airtel’s 1 billion dollar stake will be sold by its promoter Bharti Telecom Ltd on 26 May.

The block deal involving 2.75% stake sale would be conducted at around ₹558 per share, one among the sources said. the ground price marks a reduction of around 6% to the company’s stock price.

On Friday, shares of Bharti Airtel closed at ₹592.95 on the NSE. Stock markets were closed on Monday on account of Eid-Ul-Fitr.

“This will help in cleaning up the debt, and post the deal, debt are going to be zero at promoter level. This debt was any case taken also for purchasing stake in Airtel,” another source said, adding that the stake sale would also create capacity at Bharti Telecom for any longer capital or shareholder support requirement that Airtel needs.

The sale is additionally aimed removing the overhang of debt from the corporate as many ratings agencies also check out promoters’ debt, the source said.

The block deal of around 150 million shares are going to be conducted by J.P. Morgan India Pvt Ltd because the promoter’s sole placement agent for the secondary market sale.

After the block deal, stake held by the promoters of Bharti Airtel—Bharti Telecom Ltd, Indian Continent Investment Ltd, Viridian Ltd and Pastel Ltd—will fall to 56.23% from 58.98%, as per information available on the NSE.

Over the last three years, Bharti Airtel had been aggressively raising funds through rights offering , qualified institutional placements of equity, issue of foreign currency bonds, among others, for capital expansion amid its brutal tariff war.

In May last year, the mobile operator had raised ₹25,000 crore through a rights offering and another ₹7,000 crore through a far off currency perpetual bond for future rollouts to create large network capacity, while in January, the corporate had raised $3 billion through a professional institutional placement (QIP) and a foreign bond to repay government dues.

The company has also been hit by court orders, primarily a Supreme Court judgement in October directing the corporate to pay ₹35,586 crores in dues associated with adjusted cross revenues.

However, some green shoots are visible now, with a tariff increase in December substantially improving the financials of its consumer mobile operations within the January-March quarter.

Another positive for the corporate going forward is that the expected moderation in cost on its India mobile operations within the coming quarters after the corporate had frontloaded investments on its network. This was highlighted by Gopal Vittal, Bharti Airtel’s chief military officer for India and South Asia, in an investor call last week.

The anticipation of stronger earnings has also boosted Bharti Airtel’s stock, which has jumped almost 10% since reporting its earnings last week.

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