Singapore Telecom invests ₹2,649 crore in Bharti Telecom
NEWDELHI: Singapore Telecommunications Ltd (Singtel) will indirectly raise its stake in Bharti Airtel Ltd by investing ₹2,649 crore in Bharti Telecom Ltd, the promoter company of Airtel, through a preferential allotment of shares.
The investment comes within two years of Singtel’s participation in Bharti Telecom’s rights issue of ₹2,500 crore, which was completed in February 2016, Bharti Airtel said in a statement on Monday.
With the latest round of investment, Singtel’s total stake (along with its affiliates) in Bharti Telecom will increase to 48.9% from 47.17% currently, the statement said. The Mittal family-owned Bharti Enterprises continues to hold over 50% stake in Bharti Telecom.
The transaction is subject to approval by shareholders of Bharti Telecom and the funds raised will be used towards debt reduction, the company said.
“The transaction is sentimentally positive for Airtel. It is a sign of confidence by Singtel in Airtel,” a Mumbai-based analyst said on the condition of anonymity. Companies in the debt-laden telecom sector have been witnessing a double whammy after the entry of Reliance Jio Infocomm Ltd, which brought tariffs to rock-bottom and hit the revenue streams of other operators.
Bharti Airtel’s quarterly profit for the December quarter plunged 39% to ₹306 crore, as India’s telecom regulator more than halved interconnection fees and a pricing war triggered by the entry of Reliance Jio Infocomm continued unabated.
Airtel’s net debt as of December 31 was ₹91,713.9 crore, up from ₹91,480.1 crore as of September 30.
As part of its debt reduction exercise, Bharti Airtel had in December announced that it, along with another group entity, will sell a combined 20% in its DTH arm, Bharti Telemedia Ltd, to private equity firm Warburg Pincus for $350 million.