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Singtel to lift stake in Bharti Airtel’s holding firm for $413 mn

05 February, 2018

Singapore Telecommunications Ltd will invest Rs 2,649 crore ($413 million) in Bharti Airtel Ltd’s holding company, reinforcing its confidence in India’s biggest mobile-phone operator despite the turmoil unleashed by billionaire Mukesh Ambani’s Reliance Jio Infocomm Ltd.

Singtel will invest in Bharti Telecom Ltd via a preferential allotment of shares, Bharti Airtel said in a stock-exchange filing. The investment will increase the total stake of Singtel and its affiliates in Bharti Telecom to 48.90% from 47.17% stake.

Billionaire Sunil Bharti Mittal-led Bharti Enterprises Ltd will hold a tad above 50% stake in Bharti Telecom.

The investment will increase Singtel’s economic interest in Bharti Airtel to 39.5%, given that Bharti Telecom held a 50.1% stake in the mobile-phone operator as on 31 December 2017.

The transaction is subject to the approval of Bharti Telecom shareholders and is likely to be closed next month. The funds raised will be used to cut debt, the filing said.

“The fresh round of investment highlights the confidence of Singtel in Airtel, and the increased attractiveness of the Indian telecom sector following the recent consolidation,” said Deven Khanna, managing director at Bharti Telecom.

In a separate filing, Singtel said it will subscribe to shares through wholly owned subsidiary Singtel International Investments.

“This is a good opportunity for us to deepen our strategic partnership with Airtel. While there are currently headwinds in India, we take a long-term view of our investment in Airtel, which continues to be a strong market leader in a region with rapidly increasing smartphone penetration and mobile data adoption,” said Arthur Lang, CEO of international operations at Singtel.

The Singapore company has been increasing its stake in Bharti Telecom in recent years. In August 2016, Singtel bought a 7.39% stake in Bharti Telecom from Singapore state investment firm Temasek for Rs 4,392 crore ($657 million). Temasek, which owns a 51% stake in Singtel, fully exited Bharti Telecom via this deal.

In February 2016, Singtel had invested $150.48 million (Rs 996 crore) in Bharti Telecom, according to VCCEdge, the data research platform of VCCircle.

Apart from Airtel, Singtel has invested in telecom companies across Southeast Asia including Indonesia’s Telekomsel, Globe Telecom in the Philippines and Advance Info Service in Thailand. It is present in Australia through wholly owned subsidiary Optus.

Telecom consolidation
Bharti Airtel has managed to hold its ground despite the stiff competition by Jio, which was launched in September 2016 and has rapidly gained subscribers by offering cut-throat tariffs.

In fact, Bharti has struck a number of acquisitions to acquire the telecom business or airwaves of smaller rivals. In October 2017, the company agreed to acquire the consumer telecom business of the diversified Tata Group. Earlier in the year, it struck a deal to acquire Telenor India and bought the fourth-generation telecom business and airwaves of Tikona Digital Networks Pvt. Ltd for about Rs 1,600 crore.

However, Bharti has also sold a stake in the company and some of its units to raise funds in order to cut debt.

Last December, it agreed to sell a 20% stake in its DTH arm, Bharti Telemedia, for $350 million (Rs 2,259 crore) to private equity firm Warburg Pincus.

In March 2017, it had sold a 10.3% stake in tower arm Bharti Infratel to private equity firms KKR and Canada Pension Plan Investment Board (CPPIB) for Rs 6,193 crore ($951.6 million).

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Singtel to lift stake in Bharti Airtel’s holding firm for $413 mn

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