Airtel’s rights issue opens Tuesday (October 5) with the Sunil Mittal-led telco aiming to build a war chest to clear its statutory dues, retire debt, expand its 4G network and prepare for an upcoming auction of 5G airwaves to roll out the nextgen technology in India.
Airtel’s promoter group-the Mittal family and Singtel-hold nearly 56% of the telco with the rest being held by the public. The Mittal family directly and indirectly owns around 24.13% while Singtel holds 31.72%.
Subscribers to the rights issue need to pay 25% on application and the rest in two additional calls as may be decided by Airtel’s board as per the company’s needs, though within an overall time horizon of 36 months.
An analyst at a top global brokerage estimates that the upcoming Airtel rights issue requires “Singtel and the Mittal family to overall contribute around Rs 6,661 crore and Rs 5,067 crore respectively, of which their immediate 25% upfront contributions work out to Rs 1,665 crore and Rs 1,267 crore respectively”.
At press time,
did not respond to ET’s queries.
Airtel shares closed 1.22% higher at ₹681.10 on BSE Monday, a day before the issue opens. The rights issue closes on October 21.
Shareholders of Airtel will receive one share for every 14 held in the telco at ₹535 a unit.
The company has said the promoter and promoter group will collectively subscribe to the full extent of their aggregate rights entitlement-or in proportion to their shareholdings in the company. In addition, they will also subscribe to any unsubscribed shares in the issue.
Analysts expect the “significant discount” in Airtel’s rights issue pricing to encourage strong participation from existing shareholders and see the issue being subscribed comfortably. The rights issue priced at ₹535 a share, works out to a discount of almost 21.5% to the ₹681.1 closing price on Monday.
This is Airtel’s second rights issue in just over two years. It had raised ₹25,000 crore via a rights issue in May 2019.