SingTel May Raise Its Stake In Bharti Telecom

Singapore-based telecom major SingTel may raise stake in Bharti Telecom, a promoter entity of Airtel, to more than 50 percent, making the country’s first private telecom services provider a foreign entity.

Bharti Telecom is the single-largest shareholder in Bharti Airtel with about 41 percent equity stake, according to the BSE data. Sunil Bharti Mittal and his family currently own around 52 percent stake in Bharti Telecom.

“Bharti Telecom Ltd (promoter of Bharti Airtel Ltd), in order to retire some debt may seek equity from its existing promoter group (which may include its overseas entities) and SingTel in proportionate to its holding,” Bharti Airtel said in response to an e-mail query.

“Even a marginal increase in foreign equity would take the foreign investment in Bharti Telecom above 50 percent making it a foreign-owned entity. Once that happens, Bharti Telecom’s entire stake in Bharti Airtel Limited will automatically be considered as foreign investment,” Airtel said.

Foreign shareholding in Bharti Airtel is 43 percent at present and after the proposed SingTel investment, the total foreign stake would increase to around 85 percent.

According to sources, Bharti Airtel has, for the second time, applied for 100 percent Foreign Direct Investment approval offering clarity on the proposed investment.

The Department of Telecom had earlier this year rejected Bharti Airtel’s FDI application as the company had not provided clarity on the foreign investor.

“Bharti Airtel is committed to be compliant with regulatory regime for foreign investment and accordingly has applied for foreign investment for 100 percent to keep further headroom for FII/FPI investments as well,” Airtel said.

With the proposed investment, SingTel is likely to hold around 52 percent in Bharti Telecom which will effectively enhance foreign stakeholding in Bharti Airtel to around 85 percent from 43 percent at present.

SingTel, at present, holds around 35 percent stake in Bharti Airtel.

Bharti Airtel is likely to use the SingTel investment to reduce its debt. Airtel’s consolidated net debt stood at ₹1,16,645.8 crore as on June 30.―The Hindu Business Line