Under the rights offer, Airtel shareholders will receive one new share for every 14 held at Rs 535 each, the Sunil Mittal-led telco had said in a note to stock exchanges on Sunday.
“Reliance Jio’s stronger balance sheet, impending 5G spectrum auction and related capex may have prompted Bharti to raise funds, and we see it positively,” Edelweiss Research said.
The brokerage added that while “the fund raise was not necessary at this juncture, it does provide Bharti with the necessary ammunition in case of aggressive 5G rollout”.
Edelweiss said the Airtel rights issue is at a 9% discount to its CMP (closing market price) and will lead to 7% equity dilution. “We believe the 7% dilution over three-years with 55% of capital coming from the promoter will be viewed positively by investors.”
On Sunday, Airtel had said its board had “comprehensively reviewed the industry scenario, business environment, financial/ business strategy of the company and approved the company’s plan to raise further capital”.
The company’s promoter group will collectively subscribe to the full extent of their aggregate rights entitlement, or in proportion to their holding, it said. They will also subscribe to any unsubscribed shares in the issue.
The promoter group — the Mittal family and Singapore’s SingTel — own nearly 56% of the telco. The Mittal family directly and indirectly owns 24.13%, while SingTel holds 31.72%. The rest is held by the public.
Subscribers to the rights issue need to pay 25% on application and the balance in two more additional calls as may be decided by the board as per the company’s requirements, but within 36 months, the company said.
