Singapore Telecommunications (Singtel) has decided to sell a 3.33% stake in Bharti Airtel to Bharti Telecom (BTL) – the promoter company of Bharti Airtel – for SGD2.25 billion ($1.61 billion approx).
Post-the-sale, Singtel’s effective holding in Bharti Airtel will drop to 29.7% (from 31.4% now) and be worth around S$22 billion ($15.8 billion). Its reduced holding in Airtel will comprise a 19.2% indirect stake through BTL and a 10.5% direct stake. The Mittal family now holds 23.88% in Airtel, directly and through BTL.
“Singtel and its affiliates have entered into an agreement to transfer 3.33% shares to BTL for an aggregate amount of approx SGD 2.25 billion, leaving direct shareholding of Singtel and Bharti in Airtel at 10% and 6% respectively,” BTL said in an exchange filing Thursday.
Singtel, in turn said, its indirect wholly-owned subsidiaries, Pastel Ltd and Viridian Ltd had entered into a pact for the sale and transfer of an aggregate of 198 million shares of Airtel to BTL.
The Singtel-BTL deal will be completed over 90 days.
“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 equalising their effective stake in Airtel over time,” Bharti Enterprises Chairman Sunil Mittal said in an official statement.
Going forward, BTL will calibrate and spread such acquisitions to maintain a comfortable level of leverage.
ET had earlier reported the possible deal in its May 26 edition.
Airtel shares initially jumped 1.54% to Rs 750.30 on BSE Thursday morning trade. Eventually, the shares wee trading 0.8% higher at Rs 744.75 on the exchange. This gave the telco a market capitalization of over Rs 4.14 lakh-crore.
Singtel said the stake sale would unlock roughly S$2.25 billion as part of the Singtel Group’s capital recycling strategy, adding that the transaction is set to crystallise an estimated S$0.6 billion net gain on divestment for the Southeast Asian telecom carrier.
“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,” Singtel said in a media statement Thursday.
Singtel, though, said it remains a long-term investor, having invested approximately S$1.3 billion in Airtel over the last three years. “We remain committed long-term investors and look forward to unlocking Airtel’s significant long-term growth potential as it further transforms India’s digital economy through 5G.” Arthur Lang, Singtel’s Group Chief Financial Officer, said in an official statement.
Bharti Telecom said Bharti and Singtel have decided to make some directional shifts in their respective holdings in Airtel.
The latest deal comes at a time when Singtel is looking to trim down its portfolio to sharpen its focus on core businesses.
At present, the Mittals and Singtel own 50.6% and 49.4% respectively in BTL that holds 35.4% in Bharti Airtel. In addition, Singtel and the Mittal family directly hold 13.9% and 6.04%, respectively, in the telco through investment firms. These will now change, post-conclusion of the latest deal.
Singtel has been a shareholder in Airtel – India’s second-largest telco — since 2000.