Singtel to Offload Airtel Stake via Block Deals

3 Jul 2024 , 09:16 AM

Singtel, Singapore’s telecom major, may sell a large share in Bharti Airtel, India’s second-largest carrier, according to news reports. In March, it sold 0.8% to GQG Partners for ₹5,849 Crore.

Singtel’s next round of share sales may see the Singapore carrier sell shares worth up to ₹20,000 Crore in one or more block agreements.

According to the reports, Singtel intends to gradually reduce its stake in the carrier to the same level as its promoters, the Bharti Group. Bharti Group’s current effective stake is 24.57%.

They added that Singtel is collaborating with investment bank Morgan Stanley on the stake sale, and that while discussions with prospective buyers were already underway, any block deal or deals are now likely to take place only after the company’s first quarter FY25 results are published, due to Sebi restrictions on share trading by promoters and key management personnel from the end of the quarter until 48 hours after the quarterly results are published.

The GQG transaction in March of this year reduced the Singaporean telecommunications company’s share in direct and indirect holdings from 29.8% to 29%, which is currently worth an estimated S$33 billion.

Singtel, a strategic investor in Airtel since 2000, sold a 3.3% direct share in the company to Bharti Telecom, Airtel’s holding company, for ₹12,895 Crore in 2022.

Sunil Bharti Mittal, chairman of Bharti Enterprises, told Moneycontrol in February this year that Singtel’s disposal plan required it to equalise its holding with the Bharti promoters.

“Bharti Telecom is 40%. I would like that to be the only vehicle holding the entire interest in Airtel between us and Singtel. Singtel has a stake outside. We have some stakes outside…The goal is to eventually bring it there or sell some in the market so that you can equalise. “It’s their need, not ours,” he stated at the time.

Bharti Telecom, which controlled 39.37% of Bharti Airtel as of March 31, 2024, is 50.56% owned by the Mittal family, while Singtel owns 49.44% of the holding company.

Singtel holds 9.56% of Bharti Airtel directly, while the Mittal family owns 4.53% through a firm called Indian Continent Investment Ltd.

Singtel’s stake sales are part of a strategy launched in 2021 to decrease debt and give more value to shareholders through dividends while also funding the expansion of its data centre and IT services.

By the end of September 2023, this strategy has allowed Singtel to reduce its net debt by S$3.2 billion and deliver S$0.8 billion in special dividends to shareholders through capital recycling.

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