Bharti Airtel Ltd. will consider formulating a dividend policy as free cash flow increases. However, the first port of call remains deleveraging, according to managing director Gopal Vittal.
Deleveraging will continue to be a focus in the coming quarters, he said on the company’s third-quarter earnings call.
Airtel joint managing director Harjeet Kohli pointed out that the consolidated leverage (net debt/EBITDA) is currently 2.5.
The telco is striving to close to doubling its net debt/EBITDA in order to develop its dividend policy, he said. Cash flow for the next four to six quarters will be a focus.
The company’s total net debt is $2.207 trillion, the majority of which is allocated to its India operations.
Kohli said close to 50-55% of India’s debt is adjusted gross revenue dues and other dues to the telecom sector. The balance is finance lease obligation.
“Ideally, both business units (India and Africa) should have that (net debt/EBITDA below 2). Africa is much less than 1.5.”
Vital reiterated the need for industry-wide tariff increases. However, there should be no differential pricing for 5G, which is currently not monetized.
“Monetization is about fixing overall rates, but as far as 5G is concerned, 5G free data is clearly a headwind for any monetization,” the MD said.
Fixed wireless offers some monetization potential, but given the capital investment behind 5G, it’s very modest in the grand scheme of things, Vital said.
