Telecom major Bharti Airtel has sought the nod of the government for an infusion of Rs 4,900 cr from Singtel, a communications company based in Singapore and other foreign companies. If Airtel receives the nod, this would make the company a foreign entity, as this move would make push foreign shareholding in the company above the 50% mark, according to PTI.
As of now, 52% of the company is owned by Sunil Bharti Mittal and family. Singtel owns 48%.
It was reported in August that Singtel was planning to increase its stake in Airtel, and that it would be near the 85% mark. As per the rules, 49% foreign investment is automatically allowed, but anything above 50% needs the government’s nod. In a filing with the stock exchanges, the telco had said that it “may seek equity from its existing promoter group” to retire some debt. In the exchange, it said that any sort of infusion would make it a foreign entity because it would take FDI beyond 50%.
At the time, the Department of Telecommunications reportedly returned Airtel’s application for FDI because there was no clarity on the foreign investor.
A source told PTI that the Department of Telecommunications is expected to approve the infusion in December.
This comes soon after the board of telecom major approved a plan to raise $3 billion via Qualified Institution Placements (QIPs), stake sale, as well as by debt, to pay its adjusted gross revenue (AGR) dues worth Rs 43,000 crore to the government by January 24.
In a stock exchange filing, the company said that it will launch one or more QIPs, or offer for sale of equity shares, or a combination of similar offers to raise $2 billion. The balance $1 billion would be raised through debentures and bonds.
India's top telecom player needs cash to meet its statutory dues. Airtel had reported a net loss of Rs 23,044 crore for the quarter ended September 30, on account of a Rs 28,450 crore provisioning towards its AGR dues.
The company had provided Rs 28,450 crore as a charge for the quarter, consisting of the principal (Rs 6,164 crore), interest (Rs 12,219 crore), penalty (Rs 3,760 crore) and interest on penalty (Rs 6,307 crore.
Soon after, Airtel also hiked the prices of its prepaid plans by 10-40%.
With IANS inputs