Bharti Infratel shares jumped and were trading steady at higher levels after the announcement that its parent Bharti Airtel has sold 10.3% stake in the company to a consortium of the private equity firm KKR & Co and the portfolio manager Canada Pension Plan Investment Board for Rs 6,194 crore.
The sale of stake in the telecom tower firm Bharti Infratel, at Rs 325 per share, was at about 5% premium to its Friday’s closing price of Rs 310.25. Bharti Infratel was trading at Rs 318 on BSE, up 1.76% from the previous close.
Bharti Airtel, India’s largest telecom service provider, said it will use the proceeds from the sale primarily to reduce its debt. Following the closure of this transaction, Bharti Airtel’s equity holding in Bharti Infratel stands at 61.7%, and that of KKR and CPPIB at 10.3%.
“This investment by a consortium of marquee long-term investors underlines the confidence of the global investors in India’s growth story and the government’s Digital India initiative in particular. It further reinforces the positive outlook for the telecom infrastructure sector,” Bharti Airtel’s Chairman Sunil Bharti Mittal said in a statement, adding, “The long-term investment horizon of the investors aligns well with the capital needs and business cycles of Bharti Infratel.”
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Post this transaction, the stake held by KKR and CPPIB (combined) will be the single largest public shareholder block, Bharti Infratel said. The transaction marks KKR’s second investment in Bharti Infratel. Previously, the funds managed by KKR had invested in Bharti Infratel during the period 2008 to 2015.
Bharti Airtel is due to be dislodged to the second position in the Indian telecom market, after the mega merger between its two largest rivals Vodafone India and Idea Cellular, which was announced earlier last week.
Earlier last week, Bharti Airtel also announced acquisition of wireless broadband internet service provider Tikona Digital Network’s 4G business for Rs 1,600 crore. The deal includes buyout of Tikona’s Broadband Wireless Access spectrum and 350 sites in five telecom circles.
Recently, Bharti Airtel also acquired smaller telecom operator Telenor India to further augment its customer base and network, amid the ongoing consolidation in the Indian telecom sector after the entry of Reliance Jio with its free voice and data services.
The acquisition will add Telenor’s about 44 million subscribers to Bharti Airtel’s existing 266 million mobile users in India, taking the total to about 310 million, and will give it another 43.4 MHz spectrum in the precious 1800 MHz band, which could be used to offer the highly sought after 4G services.