Singtel invests $412m more in Bharti Telecom, raises effective stake in India’s largest carrier to 39.5%

Men make phone calls as they sit on a railing with Bharti Airtel billboards installed on it, along a sidewalk in Kolkata February 1, 2013. REUTERS/Rupak De Chowdhuri/Files

Singapore Telecommunications Limited (Singtel) will increase its stake Bharti Telecom, the parent company of Bharti Airtel, India’s largest telecoms firm, the companies announced on Monday.

Singtel is already the single largest shareholder in Bharti Airtel. Prior to the latest investment, its indirect stake in Bharti Airtel was a little over 38%.

The Singapore telco will invest Rs 2649 crores (US$412 million) in the unlisted Bharti Telecom, through preferential allotment of shares, taking its holdings in the company to 48.90%. This will lead to Singtel subscribing to 85.45 million new equity shares in Bharti Telecom at 310 rupees apiece.

Post the preferential allotment, its economic interest in India’s largest carrier will increase by 0.9 percentage point to 39.5 per cent.

The Singapore telco currently holds 47.17% stake in Bharti Telecom, while Bharti Enterprises (the telco’s promoters – the Mittal family)  has over 50% stake in the holding company.

The Indian telco said that the fresh infusion of funds will be used towards debt reduction.

This marks the second time in under two years that Singtel has increased its holding in Bharti Telecom, thus raising its effective stake in India’s largest carrier. In August 2016, Singtel had increased its holding in the telco’s parent Bharti Telecom by 7.39% for around $659 million (around Rs4,400 crore). At that time, it had acquired Temasek’s 7.39% stake in Bharti Telecom, as well a 21% stake in Thai telecom firm Intouch Holdings PCL for a total of 2.47 billion Singapore dollar ($1.8 billion), and had said that it would fund the deals by issuing fresh shares to Temasek totalling S$1.605 billion, and shortterm debt.

In October last year, Bharti Telecom – jointly owned by Singtel and the Mittal family (Bharti Enterprises) had announced that it would acquire an additional 4.62% stake in the telecom firm from another promoter firm – Indian Continent Investment Limited (ICIL). Post this deal, Bharti Telecom’s stake in Bharti Airtel had increased to 50.1%, as against 45.48% earlier. At the time, Bharti Telecom had not disclosed as to how much the individual stakes of Singtel and the Mittal family would increase in it.

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

According to Arthur Lang, Singtel’s chief executive officer, International, the move to hike its stake provided the Singapore telco with the opportunity to deepen strategic ties with Bharti Airtel despite the country’s mobile phone companies facing challenging times.