Airtel Plans Paring $4.6 Billion of Debt in Three Years

Bharti Airtel Ltd. is looking to pare $4.6 billion from its net borrowings over the next three years by listing its African unit and potentially selling some stake in its tower business, according to a person with knowledge of the matter, in a bid to safeguard its investment grade ratings.

India’s top wireless operator plans to raise as much as $1.5 billion by listing a quarter of equity in its Africa unit by early 2019 in either London or South Africa, the person said, asking not to be identified as the information isn’t public. The parent will also look to sell part of its stake in the $14.6 billiontower giant after Bharti Infratel Ltd. merges with Indus Towers Ltd.

The twin deals will help the billionaire Sunil Mittal-controlled carrier improve its balance sheet after net debt rose almost 45 percent to $14.6 billion over four years as the company borrowed to buy spectrum and defend its position against disruptive upstart Reliance Jio Infocomm Ltd. The build-up, which came with an eight-quarter-long stretch of earnings declines, has put Bharti Airtel at risk of a downgrade to junk at both Moody’s Investors Service and S&P Global Ratings.

“We see a high likelihood that Bharti can avoid becoming a fallen angel,” Anthony Leung, a Hong Kong-based senior analyst at Wells Fargo & Co. wrote in a report dated May 7. “We expect a majority, if not all, of Bharti’s tower business to be sold in a year’s time, which will meet the timeline target imposed by Moody’s to keep the credit at Baa3,” which is the lowest investment grade rating.

Bankers for the listing of Bharti Airtel’s Africa unit will be appointed by September, according to the person. The unit will house about $2.3 billion of debt, pushing its enterprise value to $8.3 billion, the person said.