Singapore-based telecom operator Singtel will invest Rs 2,649 crore in Bharti Telecom, the holding company of Bharti Airtel Limited, increasing its effective stake in the Indian telecom major to about 39.5%, the two companies said in separate statements today. The investment made through preferential allotment of equity shares will see Singtel hiking its stake in the holding company Bharti Telecom by 1.73 percentage points to 48.9%, the statements said. In turn, the Singapore-based Singtel’s stake in Bharti Airtel will rise by 0.9 percentage points. Bharti Telecom holds 50.1% stake in Bharti Airtel. Post the transaction, Singtel will continue to hold 15% direct stake in Bharti Airtel through its subsidiaries Pastel Ltd and Viridian Ltd, according to the BSE filings; and will hold another 24.5% stake through its holding in Bharti Telecom, calculations show.
The funds raised will be used towards debt reduction. The shares of Bharti Airtel were trading at Rs 438.05, up by 3.9% on BSE at the time of reporting, amid heavy pressure on the benchmark index. The BSE Sensex was trading down 340 points.
“Airtel Limited… announced that Singapore Telecommunications Limited (Singtel)… invest Rs 2,649 crore in Bharti Telecom Limited (Bharti Telecom), the promoter company of Airtel through preferential allotment of shares,” Bharti Airtel said in a statement. The investment comes within 23 months of Singtel’s participation in Bharti Telecom’s Right Issue of Rs. 2,500 core, which was completed in February 2016.
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, Bharti Airtel said in the statement. “Airtel shares a nearly two decade-long relationship with Singtel, which has only become stronger over the years. 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,” Deven Khanna, Managing Director, Bharti Telecom, said.
Bharti Airtel got hit hard during the October-December quarter by the 57 percent cut in the mobile termination rate for domestic calls affected by the Telecom Regulatory Authority of India (Trai), with its net profit and revenue missing Bloomberg consensus estimates. Net profit at Rs 306 crore was sequentially down 11% while revenue at Rs 20,319 crore was down 7 percent compared with the preceding quarter. However, the company’s EBITDA at Rs 7,587 crore, down 5% sequentially, was ahead of estimates. Margins expanded to 37.3% compared with 36.8% in the previous quarter.