The board of Bharti Airtel is expected to meet on Friday to discuss raising funds through a preferential share issue for investors other than its promoter group.
According to sources, the telco is looking to onboard a strategic investor via allocation of preferential equity shares, which is scheduled to be discussed at its board meeting.
The main goal of the preferential share allocation is not influenced by any sort of liability pressure but rather a strategic partner that is in line with the long-term business objectives of the company, a source told PTI.
In a report, Jefferies Equity Research said that Bharti Airtel's decision to issue equity on preferential basis was a surprise, as there was no immediate need for capital in its view. The report said that any large acquisitions will negatively affect the issuance of a strategic investor that boosts its enterprise digital offerings.
The telco did not specify the capital or timing in its exchange filing.
The issuance of the issuance will be to non-promoters, implying that the promoter's stake in the company will get diluted after the potential issue, Jefferies said. In December, Bharti Airtel cleared payments for spectrum that it acquired through auction in 2014.
Telenor spectrum, including 4 MHz, was acquired in 2014 for Rs 19,051 crore. As of September 30, 2021, the company's net debt was about 1.66 lakh crore.
Jefferies said the move came as a surprise because the company recently made spectrum payments and it can call its pending rights issue capital of Rs 15,700 crore at a month's notice, recent tariff hikes will boost its cash flows and there is no visibility of 5 G auctions in the near future.