The year 2022 started on a positive fin­ancial note. The major highlights du­­ring the year were the merger of Bh­a­­rat Broadband Network Limited (BBNL) and Bharat Sanchar Nigam Limited (BSNL) as well as the launch of a revival pa­ckage for the state-run telco. The package in­cluded cash support of Rs 439.64 billion and non-cash support of Rs 1.2 trillion.

Private telcos Bharti Airtel and Reli­an­ce Jio demonstrated strong financial performance in the first quarter of financial year 2023. Both companies reported a co­n­sistent increase in revenue and net pro­fi­ts, with earnings before interest, taxes, dep­re­ciation and amortisation (EBITDA) crossing the Rs 100 billion mark in subsequent quarters.

A notable feat for Vodafone Idea Li­mited (Vi) was the telco’s decision to con­ve­rt its accrued interest liability (on defe­rred dues) into equity, making the government the single largest shareholder in the telecom firm, holding around 33 per cent of the company’s total outstanding shares. More­over, the year witnessed significant fund­raising activity by telcos, digital infrastructure companies as well as other stakeholders along with significant merger and acquisition (M&A) and investment activity. takes a look at the key financing deals and activities in the Indian telecom sector during 2022…

M&As and stake sales

Airtel and HCIPL form JV in the satcom space

The year started with Bharti Airtel and Hughes Communications India Priva­te Limited (HCIPL) forming a joint ven­tu­re (JV) to provide satellite broadband ser­vi­ces in India. The agreement, announ­ced in May 2019, received all statutory ap­­p­rovals, including those from the Na­tional Com­pany Law Tribunal (NCLT) and the Dep­artment of Telecommunica­tions (DoT).

BBNL-BSNL merged, relief package for BSNL, MTNL announced

The most remarkable development during the year was the union cabinet’s approval of the merger of BBNL with BSNL. The cabinet also approved a Rs 1.64 trillion re­vival package for BSNL to improve the quality of its services and de-stress its balance sheet. The package included cash su­pport of Rs 439.64 billion and non-cash support of Rs 1.2 trillion.

According to the government, BSNL will be allotted spectrum in the 900/1800 MHz band administratively at a cost of Rs 449.93 billion through equity infusion to improve existing services and provide 4G services. Further, the government will pr­o­vide funding of Rs 224.71 billion to meet the projected capex for the next four years. The government will also provide Rs 137.89 billion to BSNL as viability gap fu­n­­ding for commercially unviable rural wi­re­­line operations during 2014-15 and 2019-20. Moreover, the authorised ca­pital of the operator will be increased from Rs 400 billion to Rs 1.5 trillion in lieu of ad­jus­ted gross revenue (AGR) dues, provisi­on of capex and allotment of spectrum. The AGR dues of BSNL amounting to Rs 334.04 billion will be settled by conversion into equity. In order to de-stress the balance sheet, the government approved a so­vereign guarantee bond issuance for the operator to repay the bank loans, which st­a­nd at approximately Rs 330 billion. Also, there was an element of sovereign gu­arantee bonds for Mahanagar Telepho­ne Nigam Limited (MTNL), a subsidiary of BSNL, in the package.

During the year, MTNL received sh­areholders’ approval to raise up to Rs 175.71 billion through government-guaranteed debt bonds on a private placement basis. MTNL’s shareholders also increas­ed the limit of the board up to Rs 350 billion to borrow from banks and other financial institutions.

Government becomes single largest shareholder in Vi

During the year, Vi opted to convert its full amount of interest related to spectrum auction instalments and AGR dues to government equity. Following this, the government is all set to become the single la­rgest shareholder in the telecom firm as it will now hold around 33 per cent of the co­mpany’s total outstanding shares, after conversion of its accrued interest liability (on deferred dues) into equity. Meanwhile, the promoter group (UK’s Vodafone Plc and India’s Aditya Birla Group) will collectively hold 50 per cent in the company.

In September 2022, the Ministry of Fi­nance cleared the proposal to convert Vi’s accrued interest worth Rs 161.3 billion on deferred AGR-related dues to eq­uity. Later, in October, the Securities and Exch­an­ge Board of India (SEBI) approved the government’s proposal. The decision to fi­n­alise the transaction lies with the DoT.

Reliance Jio completes acquisition of Relia­nce Infratel

In October 2022, Reliance Projects and Pro­­perty Management Services Limited, a subsidiary of Reliance Jio, moved a fresh petition at the NCLT Mumbai to comp­le­te the acquisition of Reliance Infratel Li­mited (RITL), which owns over 43,540 towers and over 178,000 km of laid-out fibre of Re­liance Communications. Later, in Nove­mber 2022, the NCLT approved the acquisition of RITL by Reliance Property and Projects Management Services Limi­ted, Jio’s subsidiary that manages its tower and fibre business. The move marked an end to RITL’s long-standing bankruptcy resolution process, which had been going on for the past two years. In December 2022, Jio deposited Rs 37.2 billion in an SBI escrow account, marking the completion of its acquisition of RITL.

Airtel acquires stakes in Indus Towers Limited and tech and renewable energy companies

During the year, Airtel acquired stakes in a number of companies. Airtel, along with its wholly owned subsidiary Nettle Infra­structure Investments Limited, acquired about a 4.7 per cent stake (127,105,179 eq­uity shares) in Indus Towers Limited from Euro Pacific Securities, an affiliate of the Vodafone Group. The shares were acquir­ed at Rs 187.88 per share.

Further, it acquired about 25 per cent equity stake in Bengaluru-based technology start-up Lavelle Networks. Airtel also ac­quired a strategic stake in Singapore-based Aqilliz, a blockchain-as-a-service co­­m­­­­pany; cloud-based networking solutions provider Cnergee Technologies; and Lemnisk (Immensitas Private Limited), un­der Airtel’s Start Up Accelerator Pro­gr­am. In addition, the telco acquired Ga­ana, a music streaming platform previously owned by Times Internet, the digital arm of the Times Group.

To up its ante in the renewable energy domain, Airtel acquired an approximately 9 per cent stake in the Avaada Clean TN Project, a renewable energy firm, for abo­ut Rs 78.8 million in an all-cash deal. The amount was paid against 7,885,150 equity shares of Rs 10 each, accounting for a 9.012 per cent stake. Further, Airtel enter­ed into an agreement to acquire a 7.036 per cent stake in Avaada KNShorapur. The deal involved a cash consideration of Rs 17.4 million, which is the acquisition cost for a total of 1,742,650 equity shares of Rs 10 each. Moreover, Nxtra Data, a subsidiary of Bharti Airtel, entered into an agreement to buy 5.1 million equity shares in Avaada MHAmravati Private Limited. The shares account for an 11.696 per cent stake in the company. The transaction was carried out at Rs 10 per equity share, taking the total investment to Rs 51.2 million.

Jio Platforms undertakes stake acquisitions in key tech companies 

Jio Platforms Limited invested $200 milli­on for a roughly 17 per cent stake in Goo­gle-backed consumer internet company Gl­ance. The transaction is subject to the satisfaction of customary closing conditio­ns and regulatory approvals. Further, Jio Pl­atforms invested $15 million in Two Plat­forms, Inc., a Silicon Valley-based de­ep tech start-up, for a 25 per cent equity sta­ke on a fully diluted basis.

Carlyle Group acquires stake in Nxtra Data Limited

In the data centre space, the Carlyle Gr­o­up acquired a 24.04 per cent stake in Bharti Airtel’s data centre subsidiary Nxtra Data Limited for Rs 17.88 billion. In a filing with the Bombay Stock Exchange, Air­tel informed that upon conversion of 17.88 million non-cumulative 0.0001 per cent compulsory convertible preference sh­­­a­­res of face value Rs 1,000 each, agg­r­e­ga­ting Rs 17.88 billion, CA Cloud Inves­t­me­nts (Carlyle) now holds a 24.04 per cent stake in Nxtra.

Singtel offloads stake in Airtel

During 2022, Singapore Telecommunica­ti­ons Limited (Singtel) concluded its plan­n­ed sale of 3.33 per cent stake in Bharti Air­tel for around $1.76 billion (approximately Rs 144 billion). The deal was exe­cu­ted by Sin­gtel subsidiaries Pastel Limi­ted and Viri­dian Limited. The two subsi­diaries collectively sold and transferred an aggregate 198 million shares of Bharti Ai­rtel, representing approximately 3.33 per cent of the total number of equity sha­r­es of Airtel.

Vodafone Group raises stake in Vi

The UK-based Vodafone Group raised its stake in Vi to 47.61 per cent through its subsidiary Prime Metals. Earlier, the company held a 44.39 per cent stake in Vi. As per a regulatory filing, Prime Metals held 2,185,526,081 equity shares, representing 7.61 per cent of Vi’s equity share capital. With this move, Prime Metals acquired 570,958,646 equity shares of the company through the allotment of equity shares pu­r­suant to a preferential issue. Earlier, the Vodafone Group had raised Rs 14.43 billion by selling a 2.4 per cent stake in Indus Towers Limited through a block deal to un­named buyers.

Fundraising and investment activity

Vi raises funds through short-term loans and other means

Vi raised funds of around Rs 50 billion as short-term loan. The operator raised this sum from banks including HDFC Bank, IDFC Bank, SBI, Union Bank of India and IndusInd.

Later, Vi’s board approved a proposal to raise funds up to Rs 145 billion throu­gh various means, including Rs 45 billion from promoter entities. The board app­ro­ved the issuance of up to 3.38 billion equity shares at an issue price of Rs 13.30 per share, which adds up to Rs 45 billion, to Euro Pacific Securities Limi­ted and Prime Me­tals Limited (Vodafone Group entities and promoters of the co­m­pany), and Ori­ana Investments Pte Li­mited (Aditya Birla Group entity forming part of the promoter group).

Vi also raised Rs 4.36 billion from the Vodafone Group Plc through a preferential issue of convertible warrants. To this end, Vi’s board approved the issuance of 427,656,421 warrants (each convertible in­to one equity share) to Euro Pacific Secu­rities, a Vodafone Group entity and promoter of the company, at an issue price of Rs 10.20 per warrant, aggregating to Rs 4.36 billion on a preferential basis.

Recently, Vi’s board gave the go-ahead to issuing rupee-denominated, optionally convertible, unsecured, unrated and un­lis­ted debentures (OCDs) to the American To­wer Corporation (ATC) to raise Rs 16 bi­llion. According to a notice issued to the stock exchanges, Vi will issue debentures with a face value of Rs 1,000,000 each, in one or more tranches, aggregating to ab­out Rs 16 billion, convertible into equity shar­es at a conversion price of Rs 10 per equity share. The preferential bond issue to ATC was subject to conditions, including the conversion of interest from the de­ferment of the telco’s AGR and spectrum du­es into equity by the government. How­ever, shareholders’ approval for the sale lapsed recently as it had not received any co-mmunication from the government on such conversion. Following this, Vi and ATC agreed to extend the last date for su­b­scription of Rs 16 billion OCDs to Feb­ruary 28, 2023 or a later date as may be mutually agreed, subject to the fulfil­me­nt of certain conditions precedent.

Jio raises funds through corporate bonds and short-term debt

Jio, too, raised about Rs 80 billion by selling corporate bonds in local money markets to primarily clear a portion of past dues relating to spectrum purchases in the 2014 and 2015 auctions. Further, in September 2022, Jio, along with, Reliance Retail Ven­tures, raised about Rs 85 billion in working capital loans collectively through short-term money market instruments.

Airtel secures an investment of up to $1 billion from Google

Airtel secured an investment of up to $1 billion from Google as part of its Google for India Digitisation Fund. This included a $700 million equity investment in Airtel at a price of Rs 734 ($9.77) per share, up to $300 million for implementing commercial agreements, and other offerings aimed at improving access and digital inclusion across India.

Later, Airtel’s board of directors app­ro­ved the issue of equity shares to Google International LLC on a preferential basis, through which Google will acquire a 1.28 per cent stake in Airtel for $700 million. In July 2022, the Competition Commission of India also approved Google Interna­tio­nal LLC’s buy of 1.28 per cent stake in Bharti Airtel.

Indus Towers Limited’s board approves fund­raising through NCDs

Indus Towers Limited’s board approved fu­ndraising through the issuance of non-convertible debentures (NCDs) of up to Rs 15 billion in multiple tranches on a private placement basis. The board approved the offering of NCDs of a total up to Rs 15 billion (base issue size of Rs 10 billion and a greenshoe option of up to an additional Rs 5 billion) in three series on a private placement basis.

HFCL raises Rs 6 billion via QIP issue

HFCL raised Rs 6 billion via a qualified in­s­titutional placement (QIP) issue. The fundraising committee of directors approv­ed the issue and allotment of 87,272,727 equity shares of Re 1 each to 21 qualified ins­titutional buyers at an issue price of Rs 68.75 per equity share (including a premium of Rs 67.75 per equity share).

Further, in September 2022, HFCL’s board approved the raising of up to Rs 6.5 billion by way of private placement, preferential issue, public issue, rights issue, QIP or through any other permissible mo­­de and/or a combination. The company’s board of directors also approved the is­­suance of up to 10,000,000 warrants convertible to 10,000,000 equity shares at a price of Rs 80 per share, totalling Rs 800 million, to one of the promoters, subject to all necessary approvals.

Excitel raises funds for enhancing technology stack

During the year, Excitel raised $11.5 million in equity from existing and new tech investors based out of Europe. The company plans to use the funds to enhance its technology stack and customer experience, and venture into newer markets.

Key deals in the digital infrastructure space

A number of deals were signed in the digital infrastructure space as well. Tejas Net­works acquired a 62.65 per cent stake in Saankhya Labs for Rs 2.76 billion. Acc­or­ding to the stock exchange filing, the company bought 6,081,946 equity shares thro­u­gh secondary purchase at a price of Rs 454.19 per equity share, amounting to 62.65 per cent of Saankhya Labs’ equity sh­are capital. The deal was executed on a fully diluted basis for a consideration of Rs 2.76 billion.

Later, in August 2022, Tejas Networks bought the residual 0.97 per cent stake to ac­quire its targeted 64.4 per cent holding in Saankhya Labs. It acquired all 6,251,496 equity shares, as agreed in the share purchase agreement with Saankhya dated March 30, 2022, at Rs 454.19 a sha­re, for a consideration of Rs 2.84 billion, on a fully diluted basis.

Moreover, Morgan Stanley-backed iBus Group acquired certain Wi-Fi-mana­g­ed service assets of D-VoiS Communi­ca­tions Private Limited. The acquisition was undertaken to help expand iBus’s footprint across more than 25 cities in India and further solidify its position in the co­untry. The iBus Group also raised an in­ve­s­t­ment of Rs 1.25 billion from Nomura. The strategic investment was aimed at en­abling the iBus Group’s consolidation and transformation of digital infrastructure in Wi-Fi-managed services and other value-added services.

Further, Sterlite Power announced the acquisition of a 64.98 per cent equity stake in Maharashtra Transmission Communi­cation Infrastructure Limited (MTCIL) fr­­om Sterlite Technologies Limited. MTCIL is a public-private partnership ve­nture for optical ground wire fibre networks operating on the build-own-operate-maintain model.


In terms of initial public offering (IPO), Kaynes Technology India Limited filed pre­liminary papers with SEBI to raise fu­nds through an IPO. According to the draft red herring prospectus, the IPO will consist of a fresh issue of equity shares ag­gregating Rs 6.5 billion, and an offer for sale of up to 7.2 million equity shares by a promoter and an existing shareholder. In October 2022, SEBI approved Kaynes Te­chnology India’s proposal to raise funds through IPO.

Outlook for 2023

The year 2023 seems to be action-packed for the telecom sector. For one, the scale of 5G roll-outs by both Airtel and Jio is going to increase significantly, requiring hu­ge investments. Airtel plans to invest Rs 270 billion-Rs 280 billion in telecom networks with a focus on 5G roll-out. Jio has earmarked $25 billion for 5G service roll-out, making it the largest 5G investment in India.

BSNL and MTNL plan to raise an aggregate amount of Rs 193.56 billion th­rough government-guaranteed bonds. Recently, in December 2022, BSNL invited bids to raise up to Rs 42 billion through Government of India-guaranteed bonds ma­turing in 10 years. This consists of a Rs 5 billion ($60.54 million) base issue and Rs 37 billion in greenshoe.

However, Vi’s future is uncertain as the government has yet to complete the transaction for debt-to-equity conversion. Whi­le some industry experts believe that the government will acquire a stake in Vi if the stock price stays stable at above Rs 10, others think that Vi’s promoters are unwilling to infuse adequate capital into the telco, ren­dering the government’s conversion of the deferred AGR dues’ interest into equity unviable. It remains to be seen how the transaction pans out for the telco in 2023.

Kuhu Singh Abbhi