GIC invests $700 million in Bharti Airtel after Moody’s cut its rating to ‘junk’

The Asia Times reported last week (8 Mar) that Singapore’s Government Investment Corporation will subscribe to 50 billion rupees ($713 million) worth of Bharti Airtel’s rights issue in exchange for an approximately 5% stake in the latter.

The Delhi-based Telecommunications Company is the second largest mobile network operator in India and the third largest in the world with operations. It has operations in 20 countries across South Asia and Africa.

Airtel said that the rights issue was initiated to “further strengthen our balance sheet with desired financial flexibility so as to meet future opportunities, particularly in the rapidly transforming Indian mobile market.””

In a statement, Bharti Airtel said that: “GIC has confirmed to subscribe to this renounced entitlement on behalf of the Singapore government and Monetary Authority of Singapore.”

Not a smooth sailing journey for established Indian Telcos after entry of Reliance Jio

In the past year, established telecommunications companies – such as Airtel and Vodafone Idea – have seen their market shares drop thanks to the entry of Reliance Jio to the Indian telecommunications market.

Reliance Jio has unlimited free voice calls and SMS benefits with its basic 4G plan. Thanks to affordable pricing and a willingness to aggressively burn cash to gain market share, it has seen its market share increase by 12.2 million subscribers in the past 12 months.

According to popular magazine BGR, Reliance Jio’s basic plan starts from Rs198 ($3.85) for 28 days while Airtel’s plan costs 35% more at Rs249 for 28 days.

Mahesh Uppal, a Director at Consulting firm ComFirst India, said that the entry of Reliance Jio has shifted the market dynamics: “The incumbents are undoubtedly under great pressure and are struggling to compete. The large debt sitting on their books further impacts their ability to raise funds and invest in their networks.”

In the past year itself, Vodafone Idea and Airtel have seen their subscriber base shrink by 24 millon users while the latter’s share price has dropped by 27% from 421 Indian Rupees to 308 Indian Rupees.

Further blow for Airtel as Moody’s cut its investment rating to “junk” – increase in interest costs

Just last week, Moody’s has lowered the credit rating of Bharti to “junk” grade Baa3 as it has concerns over weak cash flows over the next few quarters.

In the same article, Moody’s forsees that this would increase Airtel’s cost of borrowing by 30 to 50 basis points.

As at 31 Dec 2018, Airtel’s net debt stood at more than $15 against a Market Value of around $17.5 billion.

Would you invest in debt-heavy Airtel?

 

 

 

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18 Responses to “GIC invests $700 million in Bharti Airtel after Moody’s cut its rating to ‘junk’”

  • own S$ & not own S$:

    Would you invest in debt-heavy Airtel?

    would we invest?

    it depends whether it is our own money or 70% sheep CPF money.

    if it is our own money, NO.

    if it is 70% sheep CPF money, what pap Ljs and Cbs call ah kong money, then, sure as hell YES. after all bonus is paid on activity. the more S$billion of ah kong money (aka as 70% sheep money) is played, the higher the bonus. and it is a stupid civil serpent NOT to do so since it is all gain and nothing lost individually. only 70% sheep money (aka ah kong money) is lost. since it is ah kong money, what’s wrong in losing other people’s money? NOTHING wrong at all per pap Ljs and Cbs.

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  • oxygen:

    PUTTING MONEY INTO ANY ENTITY to shore up its debt-laden balance sheet adds nothing to investment asset base. UNPRODUCTIVE, particularly if the basic business model is flawed or under severe competitive threat.

    TELECOM SERVICES IS A COMMODITY-LIKE BUSINESS – no pricing power in the market-place. It is NOT technology stock.

    Dislike telecom shares – just look at Telstra & Singtel – a puppy of investment option in any portfolio mix considerations I believe.

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  • It’s cpf money:

    Only pinky will? Cause it’s not his money! It’s cpf money.

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  • patriot of TUMASIK:

    Investment kickback = 1% maybe more for brokers…GIC & Temasek is Famous for investing in Junk or Dying Companies…But then who cares NOT their money what!!!

    and whichever way the wind blows the KickBack is safely tucked away to be shared???

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  • Harder Truths:

    Do the names Lehmann Bros, Freddie & Fernie Mac ring a bell?

    There is a big difference between a bargain and a lost cause.
    Does not matter if you are gambling in Gahmen Idiot Casino (GIC) with CPF money.

    If they get re-elected don’t ask why payout is changed to 80-years.

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  • never learn any lesson:

    will it turn out to be a ” fools rush in where angels fear to tread” transaction once again??
    ..gambling with other ppls monies so why they bother.
    if turns out a bad investment n millions$ lost , no worries….just up taxes n prices again n again to cover up losses.
    she shd be thrown out with the rest of PAP!

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  • let us count the losses:

    when retirement age & cpf withdrawal age shoots up further , we’ll know for sure….
    robin hood gone wrong–rob from the poor to divide amongst the rich, namely themselves.

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  • TL Tan:

    The main issue here is short term vs long term. Moodys ratings can change over the next 2-3 months, while GIC’s investment horizon is more like 10 years, so there is nothing to worry about short-term fluctuations. Similar to what Warren Buffet would do, ignoring market noise. Bharti Airtel is huge and it can afford to compete with Reliance Jio for market share, even if that means temporarily lower short-term credit ratings. Over the long term, Bharti Airtel’s scale and scope of operations mean it would come out on top.

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  • LIONS:

    GIC IS MORE N MORE A JOKE.
    WHAT *F* Talent$,local or foreign they got there?

    GIC means Govt INCE$$ COCK-poration?
    Rape own people!

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  • RDB:

    more of our CPF money blown away by smuck smarty GIC.

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  • Its OK, Its Not Their Money:

    Its OK. Let them gamble with the high risk. Its not their money. Win, big rewards for them. Lose it OK not their money.

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  • rukidding:

    I have always felt that omething is going very wrong, “behind th scene” !

    “Things” are sure looking “fishy” indeed !

    It is very frustrating to keep receiving “Hard copy prints ofSAFRA Magazine” every month ….especially when I am ardy 60 yo?

    I am wondering “whats going on behind the scene” ???

    “Somebody” is indeed making “lots and lots of $$$” in this “outdated form of free subscriptions” magazine ???

    Who is exactly “funding” for all these “Hardcopy prints” ???..is it Public’s tax $$$ ????

    Are we alreay not in a “digital army” status already ????

    Why are we still “wasting tax payer’s $$” on Hard print ???

    Why say have diesel tax to “save the earth”??…then here we are “using hard copy paper prints which indirectly caused more trees to be used up” ???

    I say,…somebody bhind is “making lots of $$$”…WHICH WE,THE TAX PAYER could “re-channel” this same “funds” to other more meaningful needs !!

    I say,…the Opposition, Pritnam Singh should call to “raised, discuss and even investigate” why we are still sending Hundreds of thousands of $$$ worth of Hardcopy SAFRA prints for what ????

    GO DIGITAL when you are “boasting all the time” that our ARMY is already “digital ready” !!

    STOP “channelling away” Public’s funds to “support” OUTDATED METHOD of Free subscriptions !!!!

    CPIB and AGO should look into this matter URGENTLY !!!!

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  • rukidding:

    Ha,ha,..just check again…the magazine is called NSMAN and the printer is SPH holdings ???

    Funny indeed ????

    I did not subscribed at all ,…but “it keeps sending copies” to me ??

    Strange???…I didn’t pay a cent at all ,..nor did I subscribe to it ??

    If I was still a SAFRA member ??…also strange why I need not pay for any subscription fees ???

    Hello,….I already an OLD Man,..”Cold storage” reservist !!!

    I don’t need those magazines…I have already gone “digital” !

    If one hard print magazine cost S$5 ( at least)…then I would prefer you send me S$5 x 12 = S$60 ( Hard cash) to me !!!…it is more useful than those magazines !!!

    For CHRIST sake !

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  • tax collected r gambling chips:

    Why are they collecting so much money from us and not using them to improve our lives and instead throwing them away with one gargantuan loss after another in such risky gambles?

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  • Hearfbeat:

    Foreign talent will help ownself to their buffet of money

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  • Unquestioning idiots:

    Anyways no sunkens is gonna know the state secrets.
    It’s a country based on believing.
    I Neve hire Singaporeans accountants and finance grads.

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  • Kawk Bong Wan:

    Other People’s Money OPM
    Ah Kong’s money AKM
    or
    People’s Money PM ?

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  • basic and elementary:

    //PUTTING MONEY INTO ANY ENTITY to shore up its debt-laden balance sheet adds nothing to investment asset base. UNPRODUCTIVE, particularly if the basic business model is flawed or under severe competitive threat.//

    hahahaha. good one. basic and elementary.

    competitive threat. competitive threat. competitive threat. plus in a place where the culture of beautiful logic and long debate is ‘forever unending’. unlike in sinkie land where the white idiots are the ‘master of most things’.

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