Bharti Telecom to acquire stake in Airtel for up to ₹9,623 crore
NEW DELHI: Bharti Telecom Ltd, the holding company of Bharti Airtel Ltd, will acquire 4.62% in India’s largest telecom operator, the company told the National Stock Exchange on Monday.
Bharti Telecom said that the acquisition price would not be higher by more than 25% of the price arrived at as per the weighted average market price of Airtel stock. The weighted average market price for Airtel’s share in the last 60 days is ₹417.35.
At this price, the size of the deal is likely to be between ₹7,700 crore and ₹9,623 crore.
As many as 184.71 million shares owned by Indian Continent Investment Ltd (ICIL) will be acquired on or after 3 November, the company said.
ICIL will continue to hold 2.03% in Bharti Airtel after the proposed transaction.
With this transaction, Bharti Telecom’s stake in Airtel will increase to 50.1% from 45.48%.
The Mittal family, promoters of both Bharti Telecom and Bharti Airtel Ltd, own 51% in Bharti Telecom and by virtue of that, own 30% effective stake in Airtel. With the deal, the total shareholding of the family in India’s largest telco is set to rise.
It will still remain the secondlargest shareholder in the Indian company after Singapore Telecommunications Ltd (Singtel), which is the largest shareholder in Airtel with a 36.27% stake.
Reacting to the news, shares of Airtel rose 1.59% to ₹492.80 while the benchmark Sensex gained 0.33% to 33,266.16 points.
India’s telecom industry has been disrupted by Reliance Jio Infocomm Ltd as the firm made moves to grab customers with its cut-price offers.
The onslaught has increased competitive intensity and forced rival operators to raise capital expenditure. Deteriorating balance sheets have increased the pace of consolidation—benefiting the top incumbents. Smaller private operators have lost 6 percentage points of subscriber and 10 percentage points of revenue market share to top incumbents and Jio over the past 12 months. Jio has hiked tariffs for its flagship scheme by about 15% in October.