Bharti Telecom on Monday said that Singapore-based telecom operator Singapore Telecommunications Limited or Singtel will invest Rs 2,649 crore in the company, increasing its stake in the Bharti Airtel promoter to 48.9 per cent. The investment comes at a time when telecom sector has witnessed an unprecedented consolidation following the tariff war after the entry of Reliance Jio.
Bharti Telecom said the transaction highlights Singtel's confidence in Airtel and Indian telecom sector. The investment is second by Singtel within a span of 23 months. "Singtel, a long term partner of Airtel, will invest Rs 2649 Crores in Bharti Telecom Limited Bharti Telecom through preferential allotment of shares," Bharti Airtel said in a filing to the stock exchanges.
Deven Khanna, Managing Director, Bharti Telecom, said, "Airtel shares a nearly two decade-long relationship with Singtel, which has only become stronger over the years. The fresh round of investment highlights the confidence of Singtel in Airtel, and the increased attractiveness of the Indian telecom sector following the recent consolidation."
The transaction is subject to the shareholders approval of Bharti Telecom and the funds raised will be used towards debt reduction, it added. Singtel currently holds 47.17 per cent stake in Bharti Telecom while Sunil Bharti Mittal's Bharti Enterprises continues to hold over 50 per cent stake in Bharti Telecom.
"Singtel International Investments will be allotted up to 85,450,000 new equity shares in Bharti Telecom at an issue price of Rs 310 per equity share. This will increase Singtel's stake in Bharti Telecom by up to 1.7 per cent for an aggregate consideration of approximately Rs 26.5 billion," Singtel said in a separate statement.
Bharti Telecom held 50.1 per cent stake in Bharti Airtel at the end of 2017. Billionaire Sunil Bharti Mittal-led Bharti Enterprise will continue to hold over 50 per cent stake in Bharti Telecom. Post the transaction, promoters holding in Bharti Airtel will be 27.08 per cent.
"While there are currently headwinds in India, we take a long-term view of our investment in Airtel which continues to be a strong market leader in a region with rapidly increasing smartphone penetration and mobile data adoption," Arthur Lang, CEO International, Singtel said.
The move comes even as the Indian telecom sector is facing financial difficulties and revenue and profitability of established operators have come under pressure in the wake of intense competition in the market.
The entry of aggressive new operator, Reliance Jio, and its free voice and dirt-cheap data offerings has prompted incumbent telcos like Bharti Airtel, Vodafone and Idea Cellular to respond, hitting their overall financials and business metrics.
The industry is saddled with nearly Rs 4.5 lakh crore of debt, and taking stock of the financial woes of the sector, the Telecom Commission recently approved a proposal for giving relief to the industry by allowing operators more time to pay for the spectrum they bought in auctions.
The relief package for telecom operators is expected to be placed before the Union Cabinet shortly.
Shares of Airtel today closed at Rs 439.5 a unit, up by 4.2 per cent, at the BSE.
with PTI inputs
Copyright©2021 Living Media India Limited. For reprint rights: Syndications Today