Deal shows India’s telecom sector is still attractive

Singapore Telecommunications Ltd (SingTel) will increase its effective stake in Bharti Airtel to 32.34 per cent from 30.76 per cent. South-East Asia’s biggest telecom company will buy 3.62 per cent share of Bharti Telecom for $302 million (Rs 1,851 crore). Bharti Telecom holds 43.57 per cent stake in Bharti Airtel.

“The acquisition would allow SingTel to increase its effective stake in Bharti Airtel, and is in line with SingTel’s strategic focus on maximising the value of its existing businesses, which includes reviewing opportunities to increase shareholdings in existing associates,” the Singapore firm said in a statement

SingTel will buy 788,538 shares of Bharti Telecom from MacRitchie Investments Pte. This will increase SingTel’s share in the Indian holding company to 39.78 per cent from 36.16 per cent. The deal is expected to be completed by August 28, according to SingTel.

This is the second equity deal for Bharti Airtel this year. In May, Qatar Foundation picked up 5 per cent in Bharti Airtel for $1.26 billion. Bharti had issued 19.9 crore new shares to the Foundation at Rs 340 a share.

The SingTel deal indicates that foreign investors still see the Indian telecom sector as an attractive destination despite the regulatory uncertainties. Bharti Airtel will see at least one more equity deal in the next 12 months when Vodafone decides to sell the 4.4 per cent stake it holds in Airtel. Under the new mergers and acquisitions rules governing the telecom sector, a company cannot hold stake in two different operating firms.

(This article was published on August 15, 2013)
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