The challenge:

For each of the past three years, the Group Funding Risk & Markets (GFRM) team of Bharti Airtel has opted to work on one sizable multi-part improvement project. This year’s undertaking saw it tackle seven key pillars of GFRM, namely debt management, risk management, working capital management, capital structure management, ratings management, controls & compliances, and policies & governance.

The solution:

GFRM wanted to provide the business with an optimal and diversified mix of debt capital. This included the funding of capital expenditure on spectrum and operations, investing c. $12bn over a 13-month period. Simultaneously, it aimed to reduce leverage but with the same or better credit ratings profile, as also transform the risk profile of the company (in currencies, interest rates and sources of capital), complimented by build a unified operational treasury architecture, and strengthening policies and governance. The final piece was to achieve the above with even fewer resources.

Best practice and innovation:

Lengthening its debt basket and diversifying sources of debt.

Its debt maturity profile increased from approximately 3.5 years (March 2014) to more than 5.5 years (June 2015). The portfolio is now balanced across bank funding, debt capital markets funding and other multilateral sources including sovereign. Debt capacity from relationship banks now forms around 25% of the funding as of June 2015 (42% 2014 and 100% in 2013).

Reduction and stabilisation of leverage with continued strength in its ratings profile.

Despite significant spends on capex, ratings have been maintained. GFRM led the Offer for Sale of the stake in Airtel’s tower subsidiary, Bharti Infratel and tower assets sale & lease backs (~1.7 bn$), reducing leverage for Bharti Airtel whilst at the same time ensuring there was no dilution of equity holding of Bharti Airtel itself.

Transformation of the risk profile of the company for capital sources, currencies and interest rates.

The diversification of debt capital sources moved the business from being a borrower from a handful of bank lenders to a large number debt investors, especially via debt capital market issuances.

Diversification in Equity Investors.

GFRM also led the setup of Level 1 American Depositary Receipt programmes, without issuance of new shares/ without dilution, yet adding new investors.

Geographical diversification of counterparties.

Earlier borrowing was concentrated with South Asian, US and European banks. Its debt portfolio now features institutions from the Middle East and China, as well as investors from all parts of the world.

Diversification in currencies.

Its borrowing was moved from a USD-heavy currency basket to a more balanced currency basket across INR, USD, EUR and CHF.

Fine-tuning the mix of fixed-floating interest rate exposures.

Transition from a 100% floating interest rate exposure environment to a situation where a majority of its debt is at a fixed coupon rate, and at almost no incremental cost.

Doing more with less.

Driving a focussed Organisation Design, GFRM achieved its optimal treasury size. A new standardised International Delegation of Authority and engagement framework was implemented. Training decks and a manual of treasury practices were established. It also adopted a new Treasury Management System from Murex, and moved to a single, scalable pan-Indian platform for all NACH and ECS clearing.

The GFRM team found itself efficiently managing a meaningfully larger scope but with a 20% reduction in headcount.