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Bharti Telecom, the promoter company of Airtel, will be buying Singtel's 3.3% stake in Bharti Airtel, roughly 198 million shares for a consideration of Rs 12,895 crores.
In May 2022, it was first reported that Singtel, Singapore's largest mobile operator, was considering the divestment of its stake in the Indian telecom by anywhere between 2-4%. Singtel currently holds 31.7% in Bharti Airtel and 49.44% in Bharti Telecom.
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Singtel, which is also heralded as Southeast Asia's largest telecom firm, said that its units Pastel and Viridian will be selling 198 million shares together for a consideration of SGD 2.25 billion (or $1.6 billion).
"Singtel and its affiliates have entered into an agreement to transfer approximately 3.33 percent shares to BTL for an aggregate amount of approximately 2.25 billion Singapore dollars, leaving direct shareholding of Singtel and Bharti in Airtel at around 10% and 6% respectively," Bharti Airtel said in a regulatory filing.
After this transaction, Singtel's holding in Airtel will be reduced to 29.7%, 10.5% direct stake, and 19.2% stake via its stake in Bharti Telecom. In order to fund this stake acquisition, Bharti Telecom will have to raise debt since Singtel has ruled out fresh capital infusion. The acquisition of the stake is set to be completed over the next 90 days.
This divestment comes as a part of Singtel's plan to raise funds. Prior to this stake sale, the company sold its digital marketing arm for $239 million, sold a 1.6% stake worth $150 million in Airtel Africa & sold a 70% stake in its Australian Towers network for a sum of $1.31 billion.
The Group's fundraising is on account of the group's efforts to fund its 5G initiatives, invest in other growth prospects, and reduce debt. This transaction will allow the group to improve its focus on its core businesses.
"With this transaction, we will raise over S$2 billion which will help to fully meet the Group’s needs for 5G and growth initiatives in the next few years, and put us in a strong position to grow our dividends in a sustainable way in line with our dividend policy," said Singtel's Group CFO Arthur Lang.
The share of Singtel jumped 2.3% to close at SGD 2.68 per share on Thursday i.e. the day of the announcement & closed at SGD 2.65 on Friday. Airtel closed at Rs 730.85 per share on Friday, down 1.4%.
Article by Aman Agarwal.
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