Bharti Airtel, India’s second largest telecom operator, has finalised an aggressive plan to raise up to Rs 32,000 crore, including a rights issue of Rs 25,000 crore and launch of perpetual bonds worth Rs 7,000 crore, as it looks to reduce debt and take on competitor Reliance Jio in the cutthroat market.

Bharti said in a notice to the bourses — after the market closed — that its board has approved the issue of rights at Rs 220 per fully paid equity share (including a premium of R 215 per fully paid equity share over the face value of Rs 5 per share). This represents a 31.13 percent discount to Thursday’s closing price of Rs 319.45 (a fall of 0.22 percent) on the National Stock Exchange.

The rights entitlement ratio has been pegged at 19 shares for every 67 shares held by eligible shareholders as on the record date, the company, led by billionaire Sunil Mittal, added.

The company posted a nearly 72 percent decline in quarterly profit in January due to continuing pricing pressure. It was Bharti’s 11th straight profit decline on a year-on-year basis, reeling from the impact of a price war triggered by the entry of Reliance Jio, owned by Reliance Industries' Mukesh Ambani.

Earlier this month, ratings agency Moody’s Investors Service downgraded some notes of Bharti. Moody’s downgraded the senior unsecured rating for Airtel and the backed senior unsecured notes issued by unit Bharti Airtel Int’l (Netherlands) B.V. to ‘Ba1’ from ‘Baa3’ on Tuesday.

The agency withdrew the company’s ‘Baa3’ issuer rating and said the outlook is negative. “The downgrade reflects uncertainty as to whether or not the company’s profitability, cash flow situation and debt levels can improve sustainably and materially, given the competitive dynamics in the Indian telco market,” Annalisa DiChiara, Moody’s vice president and senior credit officer, said in a note.

Bharti Airtel has a total debt of Rs 1.06 lakh crore as of December 31, 2018.

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First Published:Feb 28, 2019 5:44 PM IST