Markets

Bharti Airtel's sale of towers to help reduce debt

Venkatasubramanian K BL Research Bureau | Updated on November 25, 2017

Bharti would sell 3,500 towers in six countries to Eaton and then lease it back from it.

Bharti Airtel’s move to sell and lease back towers to Eaton Towers is yet another step to reduce its debt burden. The company has been shedding stakes in tower businesses domestically as well as in its overseas operations.

Bharti would sell 3,500 towers in six countries to Eaton and then lease it back from it. Though the value of the deal is not specified, speculative reports peg the deal at $800 million to $1 billion.

This inflow would help ease some of Bharti Airtel’s debt burden of Rs 57,744 crore as of June 2014. Of course, the company enjoys an excellent interest coverage ratio of 8.5 times.

The company would now need to pay rentals to Eaton for using the tower facilities, which would involve regular payouts. Last month, Bharti had sold 4.5 per cent stake in its tower arm, Bharti Infratel, to raise Rs 2140 crore.

Clearly, the company is well on the path of debt reduction strategy, which augurs well for its long-term growth. The stock has rallied well over the past couple of months to over Rs 400 levels on the back of improving business metrics and its debt lightening measures.

The stock does trade at a stiff 50 times trailing one-year earnings, much ahead of peers in the space.



Published on September 08, 2014

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