Singapore Telecommunications Ltd said it would sell a 3.3% stake in India’s Bharti Airtel Ltd to Bharti Telecom Ltd for an aggregate consideration of around S$2.25 billion ($1.61 billion).
Singtel, Southeast Asia’s largest telecoms company, said its Pastel Ltd and Viridian Ltd units would sell 198 million shares they own in India’s second-largest telecoms operator.
Bharti Airtel shares rose as much as 2.1% after the announcement.
“Markets didn’t take the news too badly, in the sense that (the sale) is not happening on the open market, which is positive news,” said Vivekanand Subbaraman, an analyst at Ambit Capital.
Bharti Airtel competes with Mukesh Ambani-backed Vodafone Idea and Reliance Jio in India’s cutthroat telecoms market, currently in the race to spearhead the country’s next-generation 5G rollout.
Proceeds from the sale can be used to reduce the group’s debt and fund capital expenditures and 5G growth initiatives, Singtel said.
Airtel has been raising money to finance its digital ambitions, including developing home broadband, data centres and cloud adoption as it prepares to launch its next-generation 5G services in the country.
Singtel said last month it would sell its loss-making digital marketing arm Amobee for $239 million, monetized a 1.6% stake in Airtel Africa for about S$150 million in March and sold a 70-per cent stake in Airtel Africa. % on its Australian tower network for A$1.9 billion. last year.
After the stake sale, Singtel’s effective stake in Bharti Airtel will fall to 29.7%, he added.
Bharti Airtel’s current market capitalisation is over Rs 4.15 trillion.
Sunil Mittal said about the development: “Bharti Enterprises and Singtel have had two decades of an exceptional partnership based on mutual respect and trust. Over these years, Airtel has acquired a strong pan-India leadership position and also expanded to 16 countries in Africa and South Asia. After this inter-se transaction, Bharti Telecom will remain the principal vehicle to hold controlling shares in Airtel. Bharti Enterprises and Singtel have agreed to work towards equalizing their effective stake in Airtel over time. Bharti Enterprises looks forward to working with Singtel over the long term in taking Airtel to an even greater position of success.”
Arthur Lang, Singtel’s group chief financial officer, said, “As long-term strategic investors and partners, the value of our stakes in our regional associates has risen substantially over the years but has not been properly reflected in our share price. This sale in Airtel will be our first ever and seeks to address this gap by illuminating the sizable value of our holdings in Airtel. It is also part of our capital management approach to take monetisation opportunities that allow us to increase our return on invested capital and enhance total shareholder returns.”