Bharti Enterprises continues to hold over 50% stake in Bharti Telecom. The preferential allotment of shares, which is expected to close by March 2018, would allow Singtel to raise its ‘economic interest’ in Bharti Airtel by 0.9% to 39.5%.
Singapore-based telecom operator Singtel will invest Rs 2,649 crore in Bharti Telecom, the promoter company of Bharti Airtel, through preferential allotment of shares. With this transaction, which is subject to regulatory approvals, Singtel’s total stake (along with its affiliates) in Bharti Telecom will increase to 48.90% from the current 47.17%. Bharti Enterprises continues to hold over 50% stake in Bharti Telecom. The preferential allotment of shares, which is expected to close by March 2018, would allow Singtel to raise its ‘economic interest’ in Bharti Airtel by 0.9% to 39.5%. The funds thus raised will be used for debt reduction, Bharti Airtel said in a statement on Monday.
As on December 31, 2017, the company’s consolidated net debt stood at Rs 91,714 crore, higher than Rs 91,480 crore in the previous quarter. “Singtel International Investments will be allotted up to 85,450,000 new equity shares in Bharti Telecom at an issue price of Rs 310 per equity share. This will increase Singtel’s stake in Bharti Telecom by up to 1.7% for an aggregate consideration of approximately Rs 26.5 billion,” Singtel said in a separate statement. Bharti Enterprises held 50.1% stake in Bharti Airtel at the end of 2017. Sunil Mittal and his brothers and Bharti Enterprises will continue to hold over 50% stake in Bharti Telecom. After the transaction, promoters’ holding in Bharti Airtel will be 27.08%.
“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 in a statement. The investment comes within a span of two years of Singtel’s participation in Bharti Telecom’s rights issue of Rs 2,500 crore, which was completed in February 2016. “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 Singtel International CEO Arthur Lang.