Airtel going for preferential equity issue. Update – Google it is.

Airtel continues to consolidate and strengthen it’s financial position.

Company is holding board meeting on January 28, 2022 to consider a preferential issue of the equity shares. Currently, Airtel’s shareholders include – Mittal family 24.13%, SingTel 31.72% and balance by public.

Rumours are that a strategic global investor would be investing into the Company. Last year, the speculations were of Google making a substantial investment into Airtel.

Delay in my personal view must have been due to the significant change in the dynamics of the Indian telecom sector over the last few months.

Indian government came out with various relief measures for the sector in September 2021. In parallel, Jio also settled for peace.

All this would have warranted a relook at the contours of the deal with the potential investor/s.

Now if someone like Google comes on board, it would provide significant confidence to the investors. However, if it’s a normal fund raise from the financial investors, that may largely get ignored. Infact, investors then might get concerned (at least in the short term) given the ever increasing financial strength of Reliance.

Irrespective, if someone is interested to invest in the Indian telecom sector, Airtel provides one of the cleanest play and is worth considering. The Company is surely growing from strength to strength, as can also be checked from it’s information tracker.

Update January 28, 2022

Suspense is over. In line with rumours, Google it is.

  • Google investing $700 mn for 1.28% ownership into Airtel. Rs 734/ share is the preferential allotment price.,
  • It will further invest another $ 300 mn over next five years for strategic initiatives including affordable smartphones, 5G and cloud.

It’s worth noting here that in 2020, Google had committed $4.5 bn for 7.7% stake into Jio for similar strategic initiatives.

Indian telecom industry is surely moving towards an oligopolistic kind of dynamics. An implied understanding towards peace and same investors investing into competing companies for similar initiatives.

To consumers that means improvement in overall quality albeit at higher prices. For investors though, that would mean better underlying prospects !

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