Singtel Dilutes 3.3% Stake in Airtel for $1.6Bn
The dilution is part of the global entity's efforts to streamline its investments with a focus on core businesses
Bharti Telecom (BTL), the holding company of Bharti Airtel today acquired an additional 3.33% stake from its close associate Singapore Telecom (Singtel) by paying $1.61 billion dollars, the equivalent of SGD 2.25 billion. This brings the foreign partner’s stake in the Indian telecom company to 29.7%, which is valued at around #15.8 billion at current prices.
With this dilution, Singtel’s holding in Airtel would include a 19.2% indirect stake via holding company Bharti Telecom and a 10.5% direct stake in the telecom giant. In a filing with the stock exchanges early today, Bharti Telecom said, “Singtel and its affiliates have entered into an agreement to transfer 3.33% shares to BTL for an aggregate amount of approx SGD 2.25 billion, leaving direct shareholding of Singtel and Bharti in Airtel at 10% and 6% respectively.”
The statement further added that this acquisition would be completed over the next 90 days and that both Bharti Telecom and Singtel would work towards equalizing their stakes in Airtel over a period of time. “BTL will calibrate and spread such acquisitions to maintain a comfortable level of leverage.”
No threat to the partnership though
On its part, Singtel said the stake sale would help unlock roughly $1.6 billion for that company’s capital recycling strategy. “This sale in Airtel will be our first ever and seeks to address this gap by illuminating the sizable value of our holdings in Airtel. It is also part of our capital management approach to take monetisation opportunities that allow us to increase our return on invested capital and enhance total shareholder returns,” Singtel said in a statement.
The company however said it was committed to remaining a long-term investor in Bharti Airtel, having put approximately SGD 1.3 billion in the company over the past three years.
“We remain committed long-term investors and look forward to unlocking Airtel’s significant long-term growth potential as it further transforms India’s digital economy through 5G.” Arthur Lang, Singtel’s Group Chief Financial Officer, said in a statement.
As for the Indian company, Bharti Telecom claimed that the two entities had decided to move towards some directional shifts in their respective holdings in Airtel, the company that operates both mobile telephone and fixed line internet services in India. Market analysts are of the view that Singtel has been preparing to trim its investment portfolios to sharpen its core business.
The current shareholding in Bharti Telecom has the Mittals owning 50.5% stake while the rest is with Singtel. This holding company has 35.8% stake in Bharti Airtel besides which Singtel and the Mittal group has 14% and 6.04% stake respectively in the telco via investment firms. These equations are bound to change when this deal comes through.
