MUMBAI (NewsRise) -- India's Bharti Airtel has sold a 10.3% stake in its tower unit to a consortium for 61.94 billion rupees ($952 million) as the country's largest mobile phone company seeks to trim its staggering debt.
The consortium, backed by private equity firm KKR & Co. and Canada Pension Plan Investment Board, paid 325 rupees per Bharti Infratel share, a 4% premium to Monday's closing price, Bharti Airtel said in a statement to the Indian stock exchanges Tuesday.
Bharti Airtel, which will hold a 61.7% stake in the tower company after the deal closes, plans to use the proceeds to pay off consolidated debt that stood at $14.34 billion at December end.
The deal is KKR's second entry into Bharti Infratel. The private equity firm exited the tower company in 2015 after a profitable, seven-year long investment.
"The long-term investment horizon of the investors aligns well with the capital needs and business cycles of Bharti Infratel," Sunil Bharti Mittal, Bharti Airtel's billionaire chairman, said Tuesday.
The sale of the Bharti Infratel stake comes as India's mobile phone industry is consolidating amidst a brutal price war following the launch of Reliance Jio Infocomm, billionaire Mukesh Ambani's wireless venture, in September.
Jio stormed into the market offering free voice calls and low-cost data plans, further pressuring prices in India's mobile market where call rates are already among the lowest in the world.
Bharti Airtel had originally planned to sell a controlling stake in the tower unit. However, less than a week ago, it was forced to shelve that plan as Bharti Infratel shares tumbled following merger discussions between two of its top tenants - Idea Cellular and the local unit of British carrier Vodafone Group Plc.
Analysts said Tuesday's sale reflects some desperation on Bharti Airtel's part since in the past the company has offered share buyback programs at prices closer to 400 rupees a share.
"It's about how fast Bharti could sell the stake and get rid of some debt as well as raise some money for the ongoing battle with Reliance Jio," said Sanjiv Bhasin, executive vice president for market and corporate affairs at Mumbai-based brokerage IIFL. "Right now, the company is more in need of liquid cash than an upside in the price," he added.
Bharti Airtel has been on an acquisition spree for more than a year to bulk up its fourth-generation Internet spectrum footprint and fend off Jio's onslaught.
The company spent nearly $1 billion last year to buy out the spectrum holdings of two smaller carriers. Earlier this year, Bharti Airtel bought the Indian business of Norwegian carrier Telenor and last week, it said it would buy Internet services provider Tikona Digital Networks' 4G business in a deal worth 16 billion rupees.
According to data from Crisil Research, the Indian telecom industry's debt stood at 4 trillion rupees at the end of March 2016.
The staggering debt has forced several companies to sell stakes in their tower assets to raise funds. In December, Reliance Communications, controlled by Anil, the younger of the Ambani siblings, agreed to sell a 51% stake in its towers business to Canada's Brookfield Infrastructure for $1.6 billion.
Meanwhile, Idea Cellular, the third-largest Indian mobile phone company, is looking to reduce its exposure to Indus Towers, a joint venture between the Indian company, Vodafone and Bharti Airtel, as part of its merger agreement with Vodafone. Vodafone is also looking to sell all or part of its 42% stake in Indus to bring down its debt.
Shares of Bharti Airtel gained 0.19% Tuesday, while those of Bharti Infratel rose 1.42%. The benchmark S&P BSE Sensex rose 0.59%.
--Dhanya Ann Thoppil