SingTel to up stake in Airtel to 32.34% for $301 million

Singapore Telecommunications (SingTel) will increase its stake in Bharti Airtel to 32.34 percent from 30.76 percent, investing around $301 million (S$383.6 million) in the Indian mobile operator.

The decision is not significant as SingTel wanted to regain its earlier stake in Airtel. In June 2013, Airtel issued 199.87 million new equity shares (5 percent stake) to Qatar Foundation. This has resulted in an increase in Airtel’s net assets and the dilution of the SingTel Group’s equity interest in Airtel from 32.3 percent to 30.8 percent as of 30 June 2013.

Due to this stake sale, the SingTel Group recognized a gain of S$150 million from the dilution of 1.6 percent equity in Airtel during the quarter.

On 15 May 2013, SingTel said it would spend around $1.6 billion on acquisitions in the next three years. The acquisition is part of the Southeast Asia’s biggest telecoms’ strategy to boost growth. Its fourth-quarter profit decreased 33 percent.

Recently, SingTel failed to bag telecom license in Myanmar.

As per today’s announcement, SingTel will buy 788,538 shares, or 3.62 percent, of Bharti Telecom. Bharti Telecom holds approximately 43.57 percent stake in Bharti Airtel, India’s #1 telecom operator.

On 17 June 2013, Airtel said the Qatar Foundation Endowment has picked up 5 percent equity stake at Rs 340 per share for Rs 6,796 crore.

The renewed interest in investing in the Indian telecom market comes at a time when telecom operators such as Bharti Airtel, Idea Cellular and Vodafone India reporting healthy revenue growth in the first quarter of fiscal 2014.

Bharti Airtel is in the process of restructuring its businesses at present. It may sell part of its stake in fixed line and data center business. It recently hived off data center business as a separate subsidiary. Airtel is also looking for a buyer for its digital TV business. ( Airtel to divest stake in landline and enterprise biz )

According to SingTel, the acquisition of stake in Airtel is in line with SingTel’s strategic focus on maximizing the value of its existing businesses, which includes reviewing opportunities to increase shareholdings in existing associates.

Airtel SingTel deal

Singapore Telecommunications on Wednesday said its first-quarter net profit rose 7 percent to S$1.01 billion, helped by its consumer business and contribution from its regional mobile associates including Airtel.

It expects group revenue to fall by a mid-single-digit level and earnings before interests, taxes, depreciation and amortisation (EBITDA) to decline by a low single-digit level for the financial year ending March 2014.

Group operating revenue fell 5.3 percent to S$4.29 billion in the quarter.

Revenue from its mobile business in Singapore rose 6.8 percent to S$506 million, helped by higher data contribution and a cut in handset subsidies.

Its mobile subscriber base in Singapore grew 5.7 percent to 3.85 million.

The profit contribution from regional associates increased 14 percent to S$552 million in the quarter on higher results from Indonesia, Thailand and India.

SingTel on Wednesday said it plans to spend S$2 billion on acquisitions as growth in wireless earnings slows in Singapore and other countries.

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