Singapore Telecommunications Ltd (Singtel) will buy an additional 7.39 per cent stake in Bharti Telecom Ltd, the holding company of telecom operator Airtel, for $659.5 million.

The deal will take Singtel’s holding in Bharti Telecom up to 46.39 per cent. The shares are being acquired from Singapore-based sovereign wealth fund Temasek, which first picked up a stake in the Indian company in 2007.

Singtel’s move to raise its holding in the Indian venture comes at a time when Airtel is facing one of its biggest challenges in the market from Mukesh Ambani-backed Reliance Jio. The increase in stake indicates that the Singapore-based telecom major continues to believe in Airtel’s growth story.

Singtel said the acquisition is in line with the group’s long-term strategy to increase exposure to high-performing telecom businesses in the region. India is an attractive market that is reaping the benefits of rapidly increasing smartphone penetration and mobile data adoption by a growing middle class, it added.

Bharti Telecom holds 45.09 per cent in Airtel. The Mittal family has a 51 per cent stake in Bharti Telecom, while Singtel held 39 per cent stake prior to today’s transaction. Temasek held 7.39 per cent, which it is now transferring to Singtel.

The acquisition will be in cash. Singtel will pay Temasek ₹235.62 for each share of Bharti Telecom. While Bharti Telecom is unlisted, shares of Bharti Airtel were up 2.14 per cent at ₹353 a piece on the BSE at close on Thursday.

Singtel had first acquired a stake in the Bharti Group in 2000, when the Indian telecom industry was still nascent. Sunil Mittal-backed Airtel needed the investment to ramp up its operations from a few circles to become a pan-India operator.

Sixteen years later, Mittal perhaps needs Singtel again to thwart the looming challenge from Mukesh Ambani’s telecom juggernaut.

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