Sunil Mittal, the chairman of Bharti Enterprises, is acquiring a 3.3% stake in Bharti Airtel from his Singapore-based partner Singtel for about $1.6 billion (Rs 12,895 crore).
Mittal Family Increases Stake in Airtel
Within 90 days, the share purchase should be completed through the promoter arm, Bharti Telecom. The effective stake held by the Mittal family in Bharti Airtel, which is currently 23.88%, would rise to 25.56%, while Singtel’s stake will decline to 29.7% from 31.38%. The purchase of the shares will be paid for by the Mittal family taking on debt.
The Bharti group and Singtel have been working together for more than 20 years. The Singapore-based communication technology company is selling a portion of its ownership to raise money for future 5G capital expenditures and other expansion plans.
With 50.56 percent and 49.44 percent stakes, respectively, the Mittal family and Singtel are co-investors in Bharti Telecom, the promoter holding company of Bharti Airtel. Furthermore, the Mittal family owns 6.04 percent of Airtel, and Singtel owns 14. percent, respectively.
Word from Singtel and Mittal
Singtel said in a statement that after this deal, it is anticipated that the Singtel group will effectively possess a 29.7% share in Airtel, with a market value of S$22 billion (Rs 1.26 trillion). This consists of a 10.5% direct stake and a 19.2% indirect share through Bharti Telecom.
Reflecting on the development, Mittal stated that Bharti Telecom will continue to be the main vehicle to hold the majority of the shares in Airtel following this Inter-Se transaction. As part of their agreement, Bharti Enterprises and Singtel would endeavor to gradually equalize their respective effective stakes in Airtel. According to the Bharti group, the share acquisition would be adjusted to maintain a manageable level of debt.
Arthur Lang, Singtel’s group chief financial officer, said that the value of the shares in their regional partners has increased significantly over time as long-term strategic investors and partners, but has not been adequately represented in the share price. This first-ever sale of Airtel shares aims to close that gap by demonstrating the substantial value of the holdings in the company. Their capital management strategy includes taking advantage of monetization opportunities as well.
In 2000, Singtel made a $400 million investment in Airtel, which at the time was the single-largest investment made by a foreign investor in the telecom industry. Two years later, the company was listed on the stock exchange.
Investment Bets from Other Companies
Other foreign businesses, including Maxis, Telenor, and Sistema, were less fortunate with their investment wagers and were forced to write them off. The Tata-Docomo partnership also failed, and the Japanese firm eventually left India as a result of a payment disagreement.
Entrepreneur and former CEO of Airtel Sanjay Kapoor credits Singtel’s success to its investment strategy. Singtel was present in India during the 2G fraud, the introduction of Reliance Jio, and the hyper-competition brought on by the overnight admission of 12 carriers.
However, Singtel has been a persistent and patient investor in Airtel, growing its stake in the business over time. According to Kapoor, this is a result of the partners’ relationship, which is founded on trust, transparency, and good governance.
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