Bharti Telecom to purchase 3.3% stake in Airtel from Singtel
Singtel (Singapore Telecommunications Ltd.), the biggest telecom company in South East Asia, has decided to sell 3.3% of its stake in Airtel. The company will sell its shares for an aggregate amount of SGD 2.25 billion (roughly Rs. 12,900 crore) to Bharti Telecom Ltd. Pastel Ltd. and Viridian Ltd., two Singtel units, reached an agreement with Bharti Airtel to sell the shares.
Why does this story matter?
Singtel's decision to sell part of its shareholding in Airtel may not come as a surprise to many. What's surprising, however, is the decision to do so when Airtel just received its 5G allocation letter. Fine details of the deal will tell you that this is more recycling than transfer. The stake moves to Bharti Telecom, where Singtel is the majority shareholder.
Singtel's effective stake in Airtel will come down to 29.7%
Singtel will sell 198 million shares of Airtel. This will bring its effective stake in the telecom giant to 29.7%. The decision to sell shares was taken after the Singapore-based company's recent board meeting. The sale and transfer of sale will take place any time before November 2022. Singtel will make a net gain of approximately SGD 600 million from the sale.
Why is Singtel selling its stake in Airtel?
Singtel's partial disinvestment in Airtel is part of the company's capital recycling strategy. According to the company, this is to rebalance and optimize its portfolio of investments. The Singaporean telecom giant is simplifying its portfolio to find new growth engines for its 5G operations. The disinvestment is also part of the plan to equalize Singtel's and Bharti's direct shareholdings in Airtel.
Singtel is planning a broad restructuring of its assets
The streamlining of its portfolio by Singtel is not limited to selling its stake in Airtel. Last month, it offloaded its shares in Airtel Africa. It also plans to sell its digital marketing unit Amobee, a cyber security company, and stake in fiber network assets.
Bharti Telecom is a joint venture between Singtel, Mittal family
Singtel will be selling its stake in Airtel to Bharti Telecom Ltd., a joint venture between itself and the Mittal family. It is the promoter company of Bharti Airtel. The Singaporean conglomerate owns a 50.56% stake in the promoter company, while the family holds shares amounting to 49.44%. Bharti Telecom has a 35.85% shareholding in Airtel.
