Singtel to invest $657 mn in Bharti Telecom, raise stake to 30.69%

19 Aug 2016

Singapore Telecommunications, Southeast Asia's largest telecom firm, on Thursday said it will invest S$884 million ($657 million or Rs4,402.82 crore) to acquire an additional 7.39 per cent in Bharti Telecom, to raise its holding in India's largest telecom firm to 30.69 per cent.

Singtel will invest a total of S$2.47 billion, including S$1.59 billion to acquire a 21-per cent stake in Thailand's top telecom company Intouch Holdings, to consolidate its stake in two of the region's the top mobile operators.

The stakes are being bought from Singapore sovereign wealth fund Temasek, which owns more than half of Singtel. Singtel also entered into conditional share purchase agreements with Temasek.

Intouch is the largest shareholder in Advanced Info Services, Thailand's biggest mobile operator, in which Singtel already holds 23.3 per cent. Bharti Telecom is the holding company of Bharti Airtel, India's largest telecoms firm and Singtel's existing partner.

The stake purchases will increase Singtel's exposure to the high growth telecom sectors in Thailand and India that are being driven by rising mobile data usage. India is the world's second-biggest mobile phone market by customers, after China.

The acquisitions, which will be settled fully in cash, will help Bharti Airtel to bid for the upcoming spectrum auction.

Singtel said the transactions will be funded through internal cash, short-term debt and proceeds from a share placement of 386 million new Singtel shares to Temasek totalling S$1.605 billion at a price of S$4.16 per new share.

Singtel will pay Temasek THB60.83 for each share of Intouch and Rs235.62 for each share of Bharti Telecom.

The acquisitions of the stakes in Intouch and Bharti Telecom, as well as the share placement are subject to minority shareholder and regulatory approvals. The acquisitions and share placement are interdependent and have to close at the same time, Singtel stated in a release.

Bharti Airtel Limited (Airtel), India's largest telecommunications company, has operations in 18 countries across South Asia and Africa. AIS and Airtel have been associates of Singtel since the group acquired stakes in these businesses in 1999 and 2000, respectively.

 ''Singtel has been a strategic partner to both AIS and Airtel for more than 15 years. We have built deep and trusted relationships, worked well together through the years, sharing knowledge and expertise and we have grown together, from strength to strength. Today, they have a combined mobile customer base of more than 380 million across Asia and Africa. This is a unique opportunity for us to deepen our relationships with two great market leaders,'' Chua Sock Koong, Singtel Group CEO, said.

The acquisitions are in line with the group's long-term strategy to increase its exposure to high-performing associates in its portfolio of leading telecom businesses in the region. Thailand and India are fundamentally attractive markets which are reaping the benefits of rapidly increasing smartphone penetration and mobile data adoption by a growing middle class, Singtel stated in a release.

Both AIS and Airtel have strengthened their competitive positions and are well-positioned to benefit from the emerging trends, it added.

''Thailand, India and Africa continue to be attractive, high-growth markets for us. As a Group, we enjoy great synergies, economies of scale, and collaborative innovation,'' Chua added.