Mittal family increases stake in Airtel, group arm to buy 3.3% from Singtel

Transaction to cost around Rs 12,900 crore; family currently owns 24.13% stake in Airtel

Bharti Enterprises Chairman Sunil Mittal is increasing his shareholding in Bharti Airtel by acquiring a 3.3 per cent stake from his Singapore-based partner Singtel for around $1.6 billion (Rs 12,895 crore).

The share purchase will be done through the promoter arm, Bharti Telecom, and is expected to close within 90 days. The Mittal family’s effective holding in Bharti Airtel, which currently stands at 23.88 per cent, will increase to 25.56 per cent, while Singtel’s stake will reduce to 29.7 per cent from 31.38 per cent.

The Mittal family will be raising debt to fund the share purchase.

Singtel and the Bharti group have been partners for over two decades. The Singapore-based communication technology group is divesting a portion of its stake to fund its 5G capex and other growth plans over the next few years.

The Mittal family and Singtel are co-investors in Bharti Telecom, the promoter holding company of Bharti Airtel, with 50.56 per cent and 49.44 per cent stake, respectively. Additionally, the Mittal family and Singtel directly own 6.04 per cent and 14 per cent stake in Airtel, respectively.

“After this transaction, the Singtel group is expected to own an effective stake of 29.7 per cent (in Airtel), which is estimated to be worth S$22 billion (Rs 1.26 trillion). This comprises a 19.2 per cent indirect stake through Bharti Telecom and a 10.5 per cent direct stake,” Singtel said in a statement.

Speaking about the development, Mittal said: “After this inter-se transaction, Bharti Telecom will remain the principal vehicle to hold controlling shares in Airtel. Bharti Enterprises and Singtel have agreed to work towards equalising their effective stake in Airtel over time.”

The share purchase will be calibrated to maintain a comfortable level of leverage, the Bharti group said.

Arthur Lang, Singtel’s group chief financial officer, said, “As long-term strategic investors and partners, the value of our stakes in our regional associates has risen substantially over the years but has not been properly reflected in our share price. This sale in Airtel will be our first ever and seeks to address this gap by illuminating the sizable value of our holdings in Airtel. It is also part of our capital management approach to take monetisation opportunities.”

Singtel invested $400 million in Airtel in 2000, and the same was the single-largest investment by an international investor in the telecom sector at that time. The company listed on the bourses two years later.

Other foreign companies such Maxis, Telenor, and Sistema were not so lucky with their investment bets, as they had to write them off. The Tata-Docomo alliance too was unsuccessful and eventually the Japanese company exited India after a payment dispute.

Airtel’s former CEO and entrepreneur Sanjay Kapoor attributes Singtel’s success to its investment approach. “In India, Singtel witnessed the 2G scam, hyper-competition with overnight entry of 12 operators, and the launch of Reliance Jio. But Singtel has been a patient and consistent investor in Airtel and has increased its holding in the company over a period. This is due to the relationship between the partners based on mutual respect, governance, and transparency,” Kapoor said.