MUMBAI: Bharti Telecom Ltd (BTL), the controlling entity of Bharti Airtel, is staring at a financial puzzle that needs urgent solving. With its debt ballooning to nearly Rs 38,000 crore, analysts say BTL needs a much bigger dividend payout from Airtel to keep its loan sharks at bay, according to a report in The Economic Times.

BTL’s estimated annual finance cost stands at a staggering Rs 3,183.2 crore—far outpacing the modest dividend cheques of Rs 600.6 crore in FY23 and Rs 876.9 crore in FY24 from Airtel. The gap is wide, and unless Airtel loosens its purse strings, BTL might have to consider alternative moves, including a possible stake sale.

BTL’s financial burden isn’t just a case of unfortunate circumstances—it’s self-inflicted. Over the years, the entity has been on a stock-buying spree, scooping up Airtel shares from its key stakeholders, Singapore Telecommunications (Singtel) and the Mittal family.

As a result, BTL’s net debt has skyrocketed from Rs 15,900 crore in December 2022 to a massive Rs 37,800 crore in December 2024. In total, BTL has invested Rs 38,100 crore in securing a larger stake in India’s second-largest telco, including an initial Rs 1,900 crore commitment to Airtel’s October 2021 rights issue.

Motilal Oswal, in a recent report, seen by ET, suggested that Airtel’s dividend per share would have to rise to at least Rs 14 in FY25—up from Rs 8 in FY24—just to cover BTL’s interest obligations. That’s a significant bump, and whether Airtel can afford such a steep increase remains a key question.

Singtel currently owns a 49.44 per cent stake in BTL, while Bharti Enterprises, backed by the Mittal family, holds a 50.56 per cent share. Both have gradually shifted their direct Airtel stakes into BTL, which has been funding these acquisitions through debt.

ET also cited Ambit Capital’s warning that BTL has become dangerously dependent on Airtel’s dividends. If the telco doesn’t ramp up its payouts, BTL might be forced into a corner.

“We expect the dues to be refinanced as BTL owns a 40.47 per cent stake in Airtel. But given (BTL’s) rising debt-to-equity ratio, dividends from Airtel would have to be ramped up significantly over the next few years or there could be some risk of a stake sale by BTL,” noted Motilal Oswal, later in the ET report.

The numbers are daunting. BTL’s debt-to-equity ratio has surged to 5.4x in December 2024, a far cry from the more manageable 0.24x in June 2022. Additionally, BTL faces Rs 21,500 crore in upcoming debt repayments between September 2025 and February 2026.

BTL isn’t out of the woods yet. It still needs to cough up another Rs 5,800 crore for Airtel’s pending October 2021 rights issue calls, which means the dividend pressure isn’t going away anytime soon. Airtel, for its part, raised Rs 5,247 crore in the first tranche of its Rs 21,000 crore rights issue but postponed further calls, citing sufficient cash reserves.

Currently, Singtel and the Mittal family collectively own 29.49 per cent and 22.93 per cent of Airtel, respectively, through both direct and indirect holdings, much of which is routed via BTL. However, it remains unclear how much of their stake they plan to keep under the BTL umbrella.

For now, Bharti Telecom’s financial health hangs on a delicate balance—can Airtel come to the rescue, or will the mounting debt force a radical shift in ownership structure? The telecom industry is watching.