Telecom company Bharti Airtel will raise Rs 21 thousand crores. For this, the company will bring a rights issue. The company got approval for this plan in the board meeting on Sunday. Airtel's stock is trading up 2% today at Rs 603.
Airtel is the second largest company in the country by the number of subscribers. Rights issue means raising money by selling shares to existing investors only. With this money, the company will strengthen its cash reserve. Along with this, some liability will also be paid with this money. The company will also spend some money on expanding the network and auctioning and rolling out 5G Airways.
Under the rights offer, the shareholders will get one share for every 14 shares. The company will give it at Rs 535. According to today's share price, it will be available at a 10% discount. Presently its share price is Rs 603. The company's stock has grown well in the last month. On August 16, the stock had reached its high of Rs 644.
Most brokerage houses have been advised to buy this stock at a price of Rs 675 to 730. Airtel said that the board reviewed the industry environment, business environment, business strategy of the company. After this, the rights issue has been approved. Airtel promoters and promoter groups can also buy shares in this rights issue. They will be able to buy shares in proportion to their current shares. In addition, they can also buy any unsubscribed share in the issue.
Promoter Mittal family and Singapore-based Singtel hold a 56% stake in the company. The Mittal family holds a direct, indirect 24.13% stake. Singtel holds 31.72%. The rest of the shares are with the general public. Investors will be required to pay 25% of the money at the time of application in the rights issue. The company will decide the time later to repay the remaining amount. However, the rest of the money will have to be paid within 36 months.
This is the second biggest rights issue of Airtel. Earlier in May 2019, the company had raised Rs 25,000 crore from the rights issue. Airtel has to pay a total payment of Rs 13 thousand crores by June next year. It has spectrum and other payments. Most of the money will be needed by the company for the 5G auction to be held early next year. The company had a total debt of Rs 1.6 lakh crore at the end of June.
This rights issue will strengthen the balance sheet of Airtel. It is clear from this decision that the promoters of the company are aggressive about its growth. Also focusing on more market share. Because Vodafone is continuously losing its market share. In the last few years, Airtel has raised $9.8 billion in different ways. Reliance Industries had raised Rs 53,125 crore from the rights issue last year. It was the biggest rights issue in the country.
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