Bharti Airtel raising capital to enhance capacity in anticipation of large share shifts from Vodafone Idea could be considered a positive move, while any prospect of increasing stake in Indus Tower in a capital raise will be seen negatively, as per Jefferies.
Bharti Airtel’s board is scheduled to meet on August 29, 2021 to discuss various capital raising options, including equity and debt. Airtel has not revealed the amount of capital raising under consideration or the reason behind it.
As per Jefferies’ note, Airtel’s capital raising announcement came as a surprise given that there are no near-term chunky repayments coming up, and it is unlikely that Airtel would be seeking to prepay its spectrum liabilities to the government. Additionally, there is no immediate visibility on 5G auctions, the company said.
In a separate note on India telecom services, Jefferies said sector revenues grew 14 per cent year-on-year during the first quarter of the financial year 2021-22, driven by 16-18 per cent growth in rural markets.
The report said that Vodafone Idea’s continuing losses in market share suggest that the market will move steadily to a duopoly.