Bharti Airtel's board of directors authorized a fund-raising plan worth Rs 21,000 crore, primarily to cover payments for AGR (adjusted gross revenue)-related liabilities due in 2021-22. (FY22).

The board of directors authorized the issuing of equity shares with a face value of Rs 5 apiece to eligible equity shareholders on a rights basis and the issue amount is said to be up to Rs 21,000 crore.

For every 14 shares held, shareholders are said to be eligible to purchase one additional share. It’s believed that the telecom major’s shares increased 1.21 percent to 593.95 on the BSE.

In terms of payment of the issue price, 25 percent is due upon application, with the balance due in two additional calls as determined by the board of directors or a committee of the board of directors depending on the company's needs during a 36-month period.

Last week, the telecom major filed a review petition with the Supreme Court (SC) about the AGR issue. Airtel has requested that arithmetical flaws in AGR calculations be corrected. On July 23, the Supreme Court dismissed Vodafone Idea (Vi) and Airtel's petitions seeking to fix alleged irregularities in computing AGR dues.

The Department of Telecommunications (DoT) estimated Vi's entire AGR obligation to be around Rs 58,000 crore. The DoT's estimate was roughly Rs 28,700 crore more than Vi's. Airtel had also challenged the DoT's assessment of the telco's overall AGR obligation of Rs 43,980 crore.

Airtel said it needed to pay an additional Rs 13,000 crore after already paying Rs 18,000 crore.

SC issued its decision on the AGR issue in October 2019, which is used to calculate telecom companies' government dues, including license fees and spectrum usage charges. The DoT had noted in March that after the Supreme Court dismissed Vi's appeals, Airtel and Tata Teleservices sought reconsideration of the verdict, broadening the definition of AGR by embracing non-telecom earnings, and filed a motion seeking phased payment over 20 years.

The telecom major scored a net profit of Rs 283.5 crore in the first quarter of FY22, which ended in June. This was significantly less than conventional predictions, which put the figure at Rs 604 crore. In the previous quarter, the company declared a loss of Rs 15,933 crore due to a one-time provision for AGR dues. The selling of tower assets in Africa for $175 million improved the June quarter profit (or Rs 1,279.6 crore). On a year-over-year basis, the profit was down 63 percent. In addition, the board has formed a special committee of directors to deliberate on the issue's other terms and conditions, such as the issue period and record date.

Airtel's current fund raise request follows Vodafone Idea's Rs 25,000 crore rights offer in April 2019, Airtel's prior Rs 25,000 crore rights offer in May 2019, and Reliance Industries' Rs 53,125 crore rights issue last year. Its previous Rs 25,000 crore rights sale was priced at Rs 220 per share, when the stock was trading around Rs 318.

The telecom major is now expected to issue 392.5 million new shares, based on the planned value of Rs 21,000 crore and the issue price of Rs 535 per share. Given the 5,492 million outstanding shares as of June 30, 2021, this is predicted to result in a 7.15 percent erosion in the company's equity capital.