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.................12 Others.................................................17 References..........................................................................................................Contents
Introduction.............................................5 Flexibility....................................................................................................................................................................11 Timing:...........................................................................................7 Income:.............................................................................................................................................................................................................................................................................................8 Control:.......19 References
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...................................................................................................................................3 FRICTO Analysis..............................................5 Risk....................................
IPTV.5 years post rollout. Repayment of the loan was also rear-ended with the first principle repayment to take place only 2. just about US$2.Karnataka. Current net debt position including the borrowings for 3G and BWA is approximately $12 billion and with the consolidated EBITDA of approximately $4. The terms of the financing were very competitive with tenure of six years. The transaction related to the acquisition of the African assets was financed through debt through a consortium of 11 banks led by Standard Chartered and Barclays. Bharti Airtel had 200 million customers across its operations. On BWA.6 times.000 odd crores.6 billion. turnkey telecom solutions for enterprises and national & international long distance services to carriers. It also kept the loan term flexible for voluntary prepayments. Financing cost on all other debt for the Indian and South Asian business is sub 5%. Kolkata and Maharasthra for a total consideration of just over 3. Annual debt servicing cost is of approximately $200 million.000 crores which is approximately US$700 million and are in the process of working out the appropriate roaming arrangements for 3G in the remaining nine circles . DTH. fixed line.75 years. which will be serviced entirely by the African operations. high speed broadband. It is also a major Indian MNC in the true sense with operations which will spread across 18 different countries both in the Indian subcontinent and in the continent of Africa with a customer base of over 180 million . and an average maturity of 4. Punjab. it acquired spectrum in four circles .7 billion. The company offers mobile voice & data services. it results in a current net debt to consolidated EBITDA of approximately 2. Company shares are listed on The Stock Exchange. Financing and balance sheet position post the closing of the acquisition and the 3G and BWA auctions.Introduction
Company Profile Bharti airtel limited is a leading global telecommunications company with operations in 19 countries across Asia and Africa. Bharti Airtel has been ranked among the six best performing technology companies in the world by business week. which is a very comfortable position and very much in line with global telco peer group. As a management philosophy Airtel has always been debt averse and post the Zain deal it was very confident that the operating fee cash flows generated by the business that is EBITDA less CapEx of Page | 3
. Post the completion of Zain transaction acquiring operations in 15 countries across Africa on the 8th of June 2010 Airtel becomes the first Indian brand that goes truly global with a footprint that would cover just under 2 billion people. Mumbai (BSE) and The National Stock Exchange of India Limited (NSE) Bharti Airtel won spectrum in 3G auctions in 13 key circles for a total consideration of about 12.
25 0.26 46. 339.12 85.approximately $2 billion annually on a consolidated basis they will be able to bring down the leverage substantially over the next quarters.87%
Cost of Capital 14.45 29.11 0.66% 7.4 0.06% 6.00 0.65 0.46 0.36
Cost of Equity 14.61 12.55% 5.
Market Capitalization (as on Mar 25.51% 6.06 21.30 34.33% 8.37% 15.74 10.01% 5.47 0.94% 13.14 0.7
D/E 0.63 0.00 1.37% 11.67% 10.6 0.3 0.71 0.67 1.27 Mar’08 0.2 0.28 0.93% 12.803 8.95 32.78 0.49% 12. 2011): Approx.50 2.38%
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.85 0.10 Key Financial Ratios
Mar’06 D/E Long Term D/E Interest Coverage ROCE (%) EPS 0.38 27.86 24.52% 8. Rs.43 0.60% 4.86%
Optimal Capital Structure
7.82 23.76 20.33% 11.90 Mar’09 0.33 0.96%
Cost of Debt 4.01% 13.33
Beta 0.94% 10.91 0.64% 9.62 Mar’07 0.40 40.1288 billion Closing BSE share price = Rs.79 Mar’10 0.49% 14.28 28.55 0.43 23.1 0.5 0.94% 14.55%
Leverag e 0 0.58% 7.06% 8.82
Amount in Crores Capital Structure (Existing) Beta (actual) Risk Free Return Market Return Cost of Debt Debt cost premium 10% Increase per 10% Increase in Leverage 0.
99% 33.Rf) WACC= D/V*(1-Tc)*cost of debt + (1-D/V)*cost of equity
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Assuming cost of Debt increases in the same proportion as leverage but in our case in June 2010 the cost of debt has declined significantly
Company Bharti Airtel Mahanagar Telephone Nigam Ltd* Idea Cellular Ltd Reliance Communications Ltd Tata Tele Services (Maharashtra) Ltd** Tata Communications Levered Beta 0.64% 4.18% 9.37% 15.00 0.35 0.tax rate) ) CAPM Model to estimate Cost of Equity Re = Rf + βe (Rm .00% 13.73%
33.26 WACC 12.03% D/V 0.62 0.08%
Industry Average Beta (βa) Risk Free Rate (Rf) Market Return (Rm) Corpora te Tax Rate* =
0.68% Cost of Debt 4.49% 11.13
4.99% 33.99% 33.59% 15.709 0.17 0.93 0.32% 13.49% 15.75% 10.81 0.72 0.20 0.55% 0 8.25 0.95 0.00 0.05 Tax Rate (Tc) 33.38 0.32%
9.0.31% 13.802 0.00 0.961 0.07 0.8 0.99% 33.00 9.75 0.709 8.709 0.00 0.49% 12.99% 33.55% 8.05 0.00
0.872 Cost of Equity 14.99 %
* = including cess and surcharges
βe = βa ( 1 + D/E ( 1 .81% 11.19% 7.06 0.17% 13.54 0.95 1.35 Unlevered Beta 0.49% 14.999 0.80% 7.93 1.99% D/E 0.85 Relevered Beta (βe) 0.
When we look at the above figures we find that in March after having repaid the debt for Wahid Telecom.7 bn would have still Page | 6
.38 2. Bharti had a very low gearing of 0.14 June 2010 9336 1295 2625 947 4503 1.e its financial flexibility Actuals (US $ mn) Dec 2009 Equity Debt Revenue EBITDA EBITDA (LTM) Debt/Equit y Gearing (x) 8075 1023 2208 875 3654 0.FRICTO Analysis
Does increasing debt restrict the firm for seeking more debt in the future due to high debt levels? Does increasing debt violate loan covenants or result in the potential for loan covenants to be violated with poor performance? Companies use flexibility as a very important tool to draw decision on how much debt to raise for future. Companies decide on flexibility on the basis of two aspects: • Financial Ratios A very important tool to understand financial flexibility is to consider Gearing (x).e. Gearing standards determine the present debt status of a company and its industry standards determine the debt a company can take further i. Companies with existing low levels of debt decide to raise funds while companies with existing high levels of debt are advised not to comprise on their future liquidity.14 that could be raised further to industry standards of 2.06 0. As per the projections of Bharti Zain Deal consolidated Revenues and EBITDA.3 2.3 2.13 0. It is defined as: Gearing (x) = Debt /EBITDA Gearing determines the amount of time (i. a dent of $12.87 Sep 2010 10289 13389 3387 1140 4570 1.3 – 3.36 2.28 Mar 2010 9347 530 2381 904 3786 0.88 Projected Yearly 10200 12700 13000 5000 5000 1. number of years a firm shall take to cover its debt from its earnings).93 Dec 2010 10440 13378 3516 1112 4645 1.
taken gearing to 2. Thus offer Bharti was in a very good position and had enough financial flexibility to be stretched.0 R. represents the investor's opportunity cost of taking on the risk of putting money into a company. any debt. the more uncertainty there is about its ability to meet its obligations and the less debt the firm can handle. Gearing (x). in other words.equity owners and lenders . interest.5 bn was still in a position to raise another US $2. • Credit Ratings
Based on parameters like future Cash Flows. Comm 1. we try to compute financial risk of the company with expected rate of return.7
March 2010 Gearing (x)
As per the industry competitors rations also. etc. Thus looking at the above numbers we can conclude that Bharti was much more flexible to accept debt because of huge positive expected cash flows. Was quite less leveraged than other firms to do debt financing further for Zain acquisition and 3G auctioning.
Risk refers to the ability of the firm to meet its fixed financial obligations (i. which keeps gearing ideally below 3.0 MTNL 0. Bharti could raise US $12. we know that weighted average cost of capital will give a good measure of risk and it will grow or fall with corresponding increment or decrement of risk as perceived by market.5 and expected EBITDA of US $5 bn.
Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Jun-10
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.) even in adverse circumstances. Considering an efficient market. According to rating agencies. WACC. industry standards.5 billion through industry.5 bn through debt financing. preferred dividends. so WACC tells us the return that both stakeholders . rating agencies identifies the real status of a firm and its position to finance its operations through debt. which was the industry standards to offer loan. lease payments. • Industry Competitors Bharti 0. principal repayment..54 (x). Bharti Airtel Ltd. Based on industry standard of Gearing as 2. Bharti after expectedly raising US $12. The cost of capital is the expected return to equity owners (or shareholders) and to debt holders. is acceptable provided a good revenue-earning model of the firm.14 Idea 1. The more uncertain a firm’s operating cash flows.e. As part of risk analysis.can expect.
0. However.040210 66 33.60%
0.Av Cost of Debt (Kd)
8. debt financing usually (although not always under all conditions) produces higher ROE and EPS.1396979
0.37% 15.6802 72 0.99%
Income pertains to the impact of the different financing alternatives on returns to shareholders as measured by earnings per share (EPS) or return on equity (ROE).60%
0.3939 39 0.118646 23
0.6060 61 1.99%
0. Bharti has used debt as a mode of financing the expansion program.37% 15.840043 05 0.0385 94 33.1461 27 0.37% 15.181656
1.0530 93 33.8634 44 0.37% 15.2481 2 0.1569 55 0.144435 11 0.21875
0. For the Zain deal. common stock financing always produces higher earnings after taxes than debt.0492 5 33.3197 28 0.1089 3
Cost of Equity (Ke)
0.0132 07 0.9289 65 0.65
As can be seen from the above figure Bharti’s D/E ratio shot up in Q1. Because no additional interest is paid.1130 23
0.1508 64 0.7518 8 0. FY 2011 post Zain deal indicating that the acquisition was funded heavily by debt. We’ll compare the performance of the Bharti Airtel on a quarterly basis based on the consolidated financial results (international standards as per GAAP) Page | 8
43 12129 7856 21. 100 % equity financing Extra equity to be raised assuming shares are issued at market price on June 30 total number of existing shares new shares Total shares
1539923954 3797530000 ( fv = 5) 1539923954 5337453954
Assuming 1 $ = 45INR and interest charges before Debt will remain same i.39 20997 4636 5.7 billion $ is assumed on books of Zain
Perio earnin interest % change in % change in d EPS gs charges EPS earnings Dec.078904992 Jun-10 4. The drop in earnings in June 2010 can be attributed to increased interest expenses in June 2010 on the new debt it acquired and reduced income from financial activities (inr 4992 million to 2510 million).525681439 -3. The Zain deal happened in June 2010.289052891 -6.68949772 -26.69 09 1 22356 4199 5. INR 4636 million.128668172 -2.239377689 Dec10 3.18369291 Sep10 4.679448514 Mar10 5. Bharti raised 9 billion $ in debt and 1.88528543 All figures in INR millions
The above graph shows that the percentage change in earnings is greater than the % change in earnings in June 2010 implying EPS has increased after the debt financing deal.81076067 -19. Hence in this case we cannot say that debt financing has produced higher EPS as the total earnings have declined although the rate of decline of earnings is larger than rate of decline of EPS which shows that EPS has increased.e. Earnings before taxation Finance Period and interest income Dec-09 25070 remain same Less taxation remain EPS 5.Below table summarizes the EPS and earnings of Bharti Airtel (consolidated).691 Page | 9
.43 16969 6708 17.38 16589 6258 1. Below table summarizes the various scenarios if Bharti would have financed the deal from 100 % equity (full) or 50 % equity and 50 % debt a.5.
90 57 4.3 6
From the above table it is clear that equity financing will produce higher earnings after taxes but the EPS goes down as expected.half of new interest charges) 4199(same as before) 4636 ( same as before) 5672 5447 6246
Perio d Dec09 Mar-10 Jun-10 Sep-10 Dec10
Earnings before taxation and interest 25070 24056 24917 25586 22965
Finance income 4465 4992 2510 2939 386
EPS 5.1 Page | 10
6708 6258 7856
17839.1 18923.62 2 3.67009817 19588.2 4567491977 interest charges ( interest charges without debt . Finance Income remains same Extra equity to be raised assuming shares are issued at market price on June 30 total number of existing shares new shares Total shares Interest charges debt financing (100%)
769961977.2 3797530000 769961977.14 32 3. Interest charges are calculated assuming base interest charge in March 2010 will continue and the additional interest over and above that will be halved in 50 % debt $ = 45 INR 2.
b. 50 % equity 50 % debt financing Assumptions: 1.50141100 18688.96 14026.39 3.69 22356 1 20997 5.39 3.98 2 2.Mar-10 Jun-10 Sep-10 Dec-10
24056 remain same 24917 25586 22965
In INR million
same remain same
2510 2939 386
893.932.38 1.29 29. 75 1.26 9.088.
Control pertains to how different financing alternatives affect the ownership control of the firm.23 21.878.038.229.15 0 0 39. 24 0 1.4 5 0 0 11. Control can also refer to restrictions placed on the activities of the firm by restrictive covenants in loan agreements.895.53 4.288.428.45 3.127.82 245.73 12.88 5.898.329.014. 62 5. The source of funding and share holding pattern for Bharati Airtel is shown in the following tables: (Rs in Crs) Top of Form Bottom of Form Year SOURCES OF FUNDS : Share Capital Reserves Total Equity Share Warrants Equity Application Money Total Shareholders’ Funds Minority Interest Secured Loans Unsecured Loans Total Debt 1.958.601.517.229.77 37.6 1 5.3 9 0 0.9 1 19.60
.825.456. it may choose debt over new common equity. 92 1.24 27.43 5. 47 0 0 4.458 . 15 1.71 10.4 9 9.898.1 2.93 4. 98 1.855.4 2 13. A comparison of all 3 scenarios:
The above graph clearly validates that earnings increase in case of equity financing and EPS increases in case of debt financing.8 4 Page | 11 1.534 .562.9 3 9.543.724 . 89 1.772.56 92.856. If management has voting control of the firm’s common stock.2 6 109.678.1 4 1.9 2 2.980.28 5.In INR million As clear from the above table the earnings have increased marginally as compared to full equity and full debt scenarios.38 0 0 7.75 1.000 .350.839.2 2 58.961.38 194.040. 09 2.897.285.91 1.
20 0.939 .232. Under the current set up the control is firmly on the hands of promoters (foreign and Indian). The founder also held the position of Chairman and Managing Director. Bharati Airtel’s free float (unrestricted shares of a public company not held by large shareholders) was approximately 32%. The company has taken steps to reduce its debt considerably during the years 200710(during the global financial meltdown period and after).This will considerably reduce the control / restrictions imposed by the debtors. Page | 12
. This must have come with a lot of restrictive covenants in loan agreements.35
43.4761 68.54 0.31
16.35 0. with the balance of the shares held by the promoters of the business(Foreign and Indian (Promoter & Group)holds 68% shares).3 0. The Debit.8027 100 0 100 4 2 6 850 376376 377226 377232 0 377232
Demat Share 862843286 1726970056 2589813342 987956308 214303146 1202259454 3792072796 0 3792072796
As on 31st December 2010 .38 0.0158 5.Equity ratio is well below the current industry average of 35%.874.29
12. Before 2007 Bharati Airtel was a highly leveraged firm with 83% of funding done through debit in 2006.Total Liabilities Debt-Equity Ratio Debt-Equity Industry
53. with LIC of India being the Major share holder with a little over 5% holding.340 .26
9.7869 31.61 0.022. Institutional investors hold around 26% of the shares. 82 0.1973 26.Equity ratio to 20% from a very high leverage of 83% in 2006.6 0.7212 45.27
Ownership Pattern as on 31-122010 No of Shares Foreign (Promoter & Group) Indian (Promoter & Group) Total of Promoter Non Promoter (Institution) Non Promoter (Non-Institution) Total Non Promoter Total Promoter & Non Promoter Custodians(Against Receipts) Grand Total Share Holding Pattern Depository 0 3797530096 862843286 1726970056 2589813342 987956308 219760446 1207716754 3797530096
% Share Share Holding Holders 22. Over the last five years the company has brought down the Debt.83 0.5 9 0.2 Ratio 0.627 .
14% decline in the Sensex. by a PE multiple of 12.Timing:
Bharti Airtel formally announced the deal with Zain on 15 February 2010 after which the stocks fell 3.42% compared with the Sensex's 7.75 lakh shares in the past one quarter.04. 229. On BSE.77% as against 4. falling 4. 7. squeezing operators' profit margins.
India's largest listed cellular operator by sales has an equity capital of Rs.700 crore offer from Bharti for Zain's African assets. rising 4.148. Bharti has overpaid for this deal. or around Rs. the BSE Sensex was down 4.The current price of Rs. or 0. Bharti's planned $24 billion tie-up with South Africa's MTN failed in September 2009.63 crore. The stock had hit a 52-week high of Rs.84% fall. 24.50 on 27 November 2009.36.55 points.7 billion. It looks as if they’re desperate to deploy cash and are paying a 55% premium for Zain in comparison with Bharti’s own Page | 13
.39.The stock had outperformed the market over the past one month till 11 February 2010. to 16. Last month. 49.03%. It outperformed the market in past one quarter. Face value per share is Rs. 495 on 19 May 2009 and a 52-week low of Rs. Meanwhile.55 lakh shares were traded in the counter as against an average daily volume of 13. 302 discounts the company's Q3 December 2009 annualized EPS of Rs.94% to Rs. Bharti has been hunting for emerging market acquisitions as Indian market becomes increasingly competitive. 5. Bharti agreed to buy 70% of Bangladesh's Warid Telecom for an initial investment of $300 million. 1898. for a second time. 302 on reports Kuwait-based telecom company Zain accepted a $10.
this means Bharti will have to absorb it from its profitable India operations.400 cr as interest costs.6% to Rs.000 cr in debt. The India operations will do about 10. they lost 6% of their customers year on year as of September 2009 The ARPUs for Africa lie between $3 and $13 – Nigeria is halfway at $7.000 cr.10 crore on a 0. Zain September 2009 data: A quick look at the Zain September 2009 data – nine months of the year only – gives us a view of what Bharti bought. In India its ARPU is Rs. in net profits this year – that’s a hit of 25% on its profits (until the African operations scale to absorb the losses) With annualized EPS expected around Rs.000 cr. 8755. I’d imagine that 10 P/E is where it should stop falling. the operations are still not profitable: The African assets reported a loss of $35 million in 2008! To add to the misery.000 cr. Otherwise. 2.5B in cash – about 7.6B. as debt.1B.
• • •
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. 230 or $5. even greater than the home base of Kuwait.8% decline in sales to Rs.valuations. they have to raise 30. The Enterprise Value contains nearly 40% as “goodwill”. as equity. 47-50% of all Zain revenue comes from non-African sources (source: Q3 presentation) In Nigeria. there’s a legal battle on.45 crore in Q3 December 2009 over Q3 December 2008. But Bharti has no choice really – with Indian competition eating into its profits and market share. so they have to pay about $8 billion – 35. Bharti’s situation: • Bharti supposedly has $1. Nigeria accounts 21% of Zain’s worldwide customers and 16% of its revenue – the largest customer concentration for it. 9 months in USD: Revenue: $6.000 crores – and the African unit has around $2 billion in debt. 2312. say at 6% they will pay Rs. the ownership of the Nigerian unit is up in the air. Adding that to current debt will mean 39.
Zain’s situation: • • • • • • Zain’s entire operations have slumped – the first nine months of 2009 have seen a 17% drop in net profits from 235m KWD to 196m KWD.000 crores. For a set of assets that are at this point not even EBIDTA positive. Bharti Airtel's net profit rose 14. Zain has 42 million customers in Africa. Assuming they put in 5. 25. it has to go abroad. EBIDTA: $2. A few years of pain will happen. Net Profit: $677 million.
Nigeria has hope. As you might also notice.This figure shows Bharti Airtel's acquisition of Zain's mobile phone business in Africa. This compares favorably with India where Airtel’s ARPU is $5 (Rs. while its Middle Eastern activities are heavily profitable. It’s still not profitable with a loss of $88m on revenues of $986m. besides Saudi Arabia. The sale will allow them to grow closer to their home market in places like Oman. Bharti stands to gain from purchasing a stake in the African market (which is growing even in recession).Yet. the UAE and Egypt. (Zain does not classify Sudan or Morocco as “Africa”. Yemen.
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. and is not selling those to Bharti). Zain's African operations are not profitable. and accounts for 1/3rd of Zain Africa’s revenues. Sure. and the market penetration is just 45% – scope to grow. but why would Zain sell? As you can see. Average Revenue Per User (ARPU) in Africa ranges from $3 to $10. Zain has only 25% market share. with Nigeria at $7. 230). Nigeria is the bull in the room.
still.The story from Mint is that Bharti is looking to finance the Zain deal from a $7 billion USD loan – remaining $2bn will be from Indian rupee loans . LIBOR is at an all-time low of about 0.88%.00%) over LIBOR.at a rate of 300 bps (3. This is suspect – they were offering to pay 320 points for the smaller $3 bn loan for MTN last year.
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currently EBIDTA is $1. which can be lowered and internal efficiencies can be improved. That means they have to improve EBIDTA by $500m just to pay for the deal. so it’s got to scale by 40% for Bharti to get a chunk. for the dec-2010 quarter. The local mafia in Africa will be tougher to handle (they take the lucrative deals and back-peddle commissions) where in India Mittal’s political connections would have helped in the early stages.75% and we shouldn’t expect these low LIBOR rates to last too long. Bharti will pay $500m per year in interest. during the times when Bharti was in talk with Kuwait’s Zain telecom for the acquisition of its African business. How will the company’s bond rating be affected with the raise of debt and what implications does it hold on the share prices and other related implications. the debt financing went as high as over 60%.
It talks about the attitude of management and shareholders toward debt and its raise for financing.The 10 year average of LIBOR is 3. The sharp rise in the debt financing happened during the first half of 2010. Attitude of management: • The increasing trend in the debt financing across the timeline clearly indicates Bharti is moving more towards a leveraged firm. It can be seen as a positive confidence of the management towards the organization • Attraction towards the Zain Deal by Debt Financing Page | 17
. At even 2% of LIBOR and a 300 bps premium and 8% for the Indian bit.3bn.
The Debt to equity ratio has sharply increased over the last six quarters. They can definitely improve some bits – tower costs in Africa have been 4x more than India.
Bharti Airtel's gearing. which was expected to be financed by a debt of over $10 billion Timing of the Deal: Expansion was necessary Bharti Airtel left the world gasping in horror with its “out of the box” decision to hand over every core function from IT to networks. Experts comment that the deal is overpriced and Zain Africa is not a worthy investment. and. the acquisition can thereby adversely affect Bharti Airtel's gearing [debtto-equity ratio] and debt protection indicators over the short term. which reported a decline of 11% and 16% in revenues and EBITDA respectively in 9M 09 y-o-y. clearly motivated by its African dreams. 2009 However. The comments were ranging from “Pained by Zain. Reaction of the research houses: • Almost all the research houses have been critical towards this high debt deal. from around 0. after the acquisition. paid a glaring “opportunity cost” to take over Zain Africa.15 times as on 31 December. This reflects CRISIL's belief that Bharti Airtel's proposed acquisition of Zain Africa BV's business for an enterprise value of US$10. Post-Zain deal: S&P lowers Airtel's credit rating Page | 18
.Bharti Airtel. Bharti Airtel notched up its 100 millionth customer last May and also overtook BSNL to become India’s largest telco by revenues that year but there was continuous drop in the margin of profit over the years. In the telecom space. FITCH: Bharti Airtel has been placed on Rating Watch Negative (RWN). The idea was to remain and grow as a core telecom company which it did and did with elegance. placed Bharti's long-term debt on rating watch with negative implications. The RWN also takes into account the uncertainties surrounding the targeted turnaround of the loss-making operations of Zain's African assets. But the huge debt financing bought a lot of financial volatility into Bharti’s Balance sheet.7 billion will be largely debtfunded. a net loss of US$37 million during the same period. the Indian arm of Standard and Poor's. after the announcement of the potential Bharti-Zain deal. It was evident when Bharti’s stock prices fell by over 14% in two days on the BSE. Attitude of the share holders: • The large debt financing is mostly seen as a negative signal to the share holders. is expected to increase to more than 1 time. to IBM in 2004. Rating Cut” from Bank of America Merill Lynch to “Very expensive diversification” by Credit Suisse Impacts on Credit Ratings: CRISIL On February 19. this deal was expected to diversify the risk profile of the company. Its evident from the fact that the share prices of Bharti is far more sensitive to the changes of EPS than before 2010. 2010 credit rating agency CRISIL.
The debt funding for Zain is around $9 billion or Rs.airtel.
1. Broadband wireless access auctions is still underway and the debt on the books ending March is over 1200 crore Financing through debt is not always good. 42000 crore at current exchange rate. http://www.com/ 2.com/financials/bhartiairtel/balance-sheet/BA08
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. if there is strong vision and business strategy in place for the risk associated with high debt financing.moneycontrol. An optimum portion of total financing is needed for best results. www.S&P lowered Bharti's long-term corporate credit rating to 'BB+' from 'BBB-' but said the outlook is stable. High debt to equity actually gives an overall bad signal to the investors. most of the times the markets and the shareholders take this as a negative signal. 12. www. A shift to BB rating category indicates that a company has been moved from investment grade to speculative grade. funding required for 3G auction is over Rs.in/Investor Relations 3. Add to that.capitaline.000 crore. The rating cut has come on back of concerns regarding Zain and 3G funding. It’s purely the management’s decisions to go for the higher debt financing.