Bharti Airtel has agreed to sell a five per cent stake to the Qatar Foundation Endowment (QFE) for INR68 billion ($1.26 billion), in a move that boosts the operator’s capital structure as well as offering potential funds for its future growth strategy.
QFE, which is investing on behalf of the non-profit Qatar Foundation, will subscribe to 199.9 million new Bharti Airtel shares at INR340 per share. The foundation is owned by the Gulf state’s royal family.
The operator’s finances are under strain. This week’s fourth quarter results saw net profits halved, thanks to higher interest costs, tax charges, depreciation and losses at its African operations.
The Qatari investment could be used to reduce Bharti Airtel’s net debt levels. Also, some of the funds could be directed towards future growth, for instance buying out minority shareholders in those operators in Africa where the company is not already in 100 per cent control. Another use could be to fund the purchase of spectrum of India.
“This strategic partnership with QFE demonstrates the confidence they have in the company and our strategy for growth,” said Sunil Mittal (pictured), Bharti Airtel’s chairman. Mittal is the controlling shareholder in the group.
In addition to India, and the group’s investments in Africa, the company has operations elsewhere in south Asia, including Bangladesh, where it is buying the remaining 30 per cent in Airtel Bangladesh it does not already own from the Warid Group for an undisclosed sum.