Bharti plans to prepay up to $900 mn of debt

New Delhi: Sitting on a good amount of cash flows, Bharti Airtel today said it will consider prepaying up to $900 million of the debt it raised while acquiring African operations of Zain telecom in June this year, reports PTI.

The company is looking at prepaying a part of the debt.

It would be in the range of $800-900 million, Bharti Group chief financial officer Manik Jhangiani said.

The total cost of the Bharti-Zain deal that was signed in June was at $10.7 billion. This included an equity value of $9 billion and $1.7 billion of consolidated debt obligations.

Bharti had borrowed $7.5 billion from different banks to finance the acquisition of Zain.

According to Mr Jhangiani, flexibility of prepayments has always been part of the loan agreement and Bharti has the option of prepaying based on its cash flow.

The company had seen significant free cash flows over the past few quarters.

Bharti’s results for the three months ended 30th September show the telco’s cash balance on the books at Rs1,737 crore.

Originally, 11 banks led by Standard Chartered Plc, had underwritten the $7.5 billion loan.

Besides, the company could also look at an initial public offer for its tower unit, although there is no definite plan, Mr Jhangiani said.

Bharti Infratel is one of the tower units of Bharti Airtel. It is a wholly-owned subsidiary of Bharti.


Cheaper funding sources can help reduce microfinance interest rates

New Delhi: Amid sharp criticism over high interest rates, India's microfinance veterans have said that cheaper sources of funding can further bring down the rates charged by microfinance institutions, reports PTI.

“Interest rates are an issue that concerns the entire industry, which is subject to combination of issues like scale, cost of availability of funds and market forces,” Vijay Mahajan, president of the Microfinance Institutions Network (MFIN) that represents 44 leading microfinance lenders, told PTI.

Mr Mahajan, who is associated with rural economic development for nearly three decades and also heads the microfinance institution Basix, further added that the high cost of funds available to microfinance institutions (MFIs) was one of the major problems in the microfinance sector.
The loan book size of domestic MFIs, which cater to about 2.7 crore poor people, is about Rs33,000 crore. MFIs extend loans in rural areas, mainly unbanked areas.

"As MFIs, we have always stated that the growth of the base (of customers) will be critical to the reduction of costs. In addition, we can reduce costs if cheaper source of funds are made available to us," he said.

Sajeev Viswanathan, CEO of Bharatiya Samruddhi Finance, a microfinance firm promoted by Basix, said, “Yes, it is possible to reduce it (interest rates). One way to reduce it is by reducing the operating costs, and second way is banks reducing their interest (rates charged) from MFIs.”

Microfinance players raise funds through various sources including equity, term loans from banks/financial institutions, securitisation, rated securitisation, non-convertible debentures and commercial paper.

Out of the Rs33,000 crore loan book size, about Rs5,000-Rs6,000 crore comes from private equity, capital market while around Rs27,000 crore comes from banks, which is the only sustainable source of funding, Mr Viswanathan said.

In September, the finance ministry had asked state-owned banks to ask MFIs to cap their lending rates in the range of 20%-24% as a precondition to access bank finance.

Leading industry player SKS Microfinance recently said it would reduce interest rates across states to 24%.

Earlier this month, the top five microfinance companies including SKS Microfinance, Basix, Spandana, Share Microfin and Asmitha Microfin agreed to reduce interest rates they charge from borrowers to 24%.

"If all the stakeholders like the government, bankers, the regulator and key decision makers realise the importance of financial inclusion which can be achieved only by a robust micro finance industry we believe the microfinance industry has a very bright future," Mr Mahajan added.


Domestic car sales up by 38%, bikes 43% in Oct: SIAM

New Delhi: Domestic passenger car sales jumped by 37.99% to 1,82,992 units in October compared to 1,32,615 units in the same month last year, reports PTI.

According to the figures released by the Society of Indian Automobile Manufacturers (SIAM) today, motorcycle sales in the country during the month grew by 43.31% to 8,76,810 units from 6,11,828 units in the same month last year.

Total two-wheeler sales in October increased by 50.38% to 11,27,827 units from 7,49,965 units in October 2009.

Sales of commercial vehicles jumped by 18.17% to 50,835 units from 43,018 units in the year-ago period, SIAM said.

Total sales of vehicles across categories registered a growth of 45.93% to 14,60,655 units in October as against 10,00,953 units in the same month last year, it added.


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