Financially Strapped Bharti Airtel Sells Stake to Qatar

Sivaram V/Reuters

MUMBAIâ€" Bharti Airtel, India’s largest mobile phone company by subscribers, said Friday it would sell a five percent stake to the Qatar Foundation Endowment for $1.26 billion.

With 271 million customers around the world, Bharti Airtel has been one of the most prominent beneficiaries of the Indian government’s move in the 1990s to loosen its control of the industry, creating a nimble mobile phone sector that quickly leapfrogged the fixed line business to become one of the fastest growing in the world.

But Bharti Airtel is struggling with a massive debt load, and an expensive expansion into Africa. In 2010, it purchased the Africa operations of Zain Group, based in Kuwait, for $10.7 billion, a deal that is still a drag on the company.

On Thursday, Bharti said its net loss from its Africa operations for the period from January through March widened to 4.9 billion rupees ($90 million) from 3.4 billion rupees a year ago. The company said it had $11.7 billion in debt on March 31, the end of India’s fiscal year.

Bikas Das/Associated Press Sunil Mittal, chairman and managing director of Bharti Airtel Limited at a press conference in Kolkata, West Bengal on Apr. 10.

In the stake sale, Bharti Airtel will issue 199.9 million new shares at 340 per share, 7.3 percent above where the company’s stock was trading before the deal was announced.

The Qatar Foundation Endowment is the investment arm of the Qatar Foundation, a non-profit organization founded by Qatar’s royal family.

Bharti, which is already partly owned by Southeast Asian carrier SingTel, said the deal will strengthen its ties to the Middle East.

‘‘This agreement exemplifies further strengthening of the already deep economic and cultural relations between Qatar and India,’’ the company’s chairman, Sunil Mittal, said in a statement.

“The deal is a positive step for Bharti which has been trying to improve its financial health for some time now,” said Ankita Somani a research analyst specializing in the telecom industry at Angel Broking in Mumbai. “It should help ease the debt burden on the company and improve its capital structure.”