Some of the big global digital tech players are in talks with Singtel (Singapore Telecommunications) as well as the Sunil Bharti Mittal family for buying the 1-2% stake that the Singapore-based telecom firm is looking to offload in Bharti Airtel. Industry sources aware of the development said that the stake sale may either happen directly between Singtel and the digital players concerned or the Sunil Bharti Mittal family may first acquire it and subsequently sell to a digital player at a premium later.
According to sources, acquiring 1-2% stake from Singtel does not bring any strategic gain to the Mittal family so it would like to rope in a digital partner. Further, the company needs funds for the upcoming 5G auctions so it does not make sense for it to spend money elsewhere around this time.
Similarly, for Singtel offloading such a small stake does not mean any strategic shift in its larger investment in Bharti Airtel. Roping in some of the big tech players does offer a digital edge to Bharti Airtel as there’s lot of convergence happening between telecom and tech players. Just to illustrate, through the strategic partnership with Google struck earlier during the year, Bharti would benefit by way of building extensive offerings that cover a range of Android-enabled devices, and developing a cloud ecosystem. Similarly, Google through its partnership with Bharti and Jio gets access to more than 700 million mobile users in the country. Google in partnership with Jio has already developed a low-cost smartphone which may help in digital inclusion.
Reports suggest that Singtel is in talks with the Mittal family for selling around 2% of its stake in Bharti Airtel. The Singapore-based telecom firm wants to redeploy the funds so garnered in some digital ventures.
So far, only Google has invested in Bharti whereas rival Jio Platforms has investments by Google, Facebook, and Qualcomm apart from a host of private equity players. In total, Reliance Industries has sold 32.94% stake in Jio Platforms to raise around $20.2 billion.
Bharti had, in January this year, roped in Google as a strategic investor by selling 1.28% stake to it for $1 billion. Any investor which buys upto 2% Singtel’s stake in Bharti Airtel would have to shell out around $1-2 billion going by Bharti’s marketcap of Rs 3.87 trillion.
Since around 55.92% stake in Bharti Airtel is held by promoters – Mittal family and Singtel – the scope for selling large stakes to tech majors is not possible. In contrast, Jio Platforms being a 100% subsidiary of RIL had scope to rope in large number of strategic partners. For instance, in July 2020 Google picked up a 7.73% stake in Jio Platforms for $4.5 billion.
An e-mail query sent to Bharti Airtel did not elicit any response till the time of going to the press.
Industry experts said that the trend of telecom service providers roping in tech majors is a positive development as it brings greater synergies between the two. The global tech majors have already announced that they would not get into any exclusive partnership with any telecom service providers but would explore opportunities with each one of them.
The effective shareholding of Singtel in Bharti Airtel is 31.72% while that of Mittal family is 24.2%.
On Thursday, Bharti Airtel’s shares closed up 0.79% at Rs 693.65 on the Bombay Stock Exchange.