Government of Singapore to invest in Bharti Airtel

India’s second largest telecom company, Bharti Airtel Limited reported in an exchange filing that GIC Pte, acting in concert with the Government of Singapore and the monetary authority, will subscribe to shares worth Rs. 5,000 crore in its proposed rights issue.

The company’s promoters stated that they’ve transferred their right of subscribing to the shares in favour of the Singapore government.

About a week ago, the company made known its plans to raise approximately Rs. 32,000 crore through a combination of a rights issue and perpetual bonds. Of the total capital, it intended to raise Rs. 25,000 through rights issue and the remaining through perpetual bonds.

By raising the capital, Bharti Airtel’s debt could reduce by 30 per cent. Furthermore, its leverage ratio is expected to plummet to 2.9.
This fundraiser is essential to help Bharti Airtel meet its liabilities for the ongoing financial year, as it is more than thrice the average cash the company generated in the last 10 years.

Furthermore, Moody’s downgraded its rating for the first time by one notch to ‘Ba1’ from ‘Baa3’. This paints a picture of the intense competition in the Indian telecom market.

On Thursday, the shares of Bharti Airtel opened at Rs. 309.50, and hit a high and low of Rs. 311.25 and Rs. 307.75 per share, respectively. At 12:39 pm, the stock was trading at Rs. 309.30, down 0.02 per cent.