Singapore Telecommunications Ltd (Singtel) has signed an agreement last week to acquire 7.39% stake in Bharti Telecom Limited—the holding company of Bharti Airtel in India, via Temasek Holdings, which holds majority stake in Singtel, the company said in a statement. The deal valued at $659.51 million according to Mint, will allow Singtel to further strengthen its holding capacity in India via Bharti Airtel, which is India’s largest telecom operator in terms of subscriber base.
The acquisition will be settled fully in cash, according the statement and the transaction will be funded via “internal cash, short-term debt and proceeds from a share placement of 386 million new Singtel shares to Temasek totaling S$1.605 billion at a price of S$4.16 per new share.” Apart from the Airtel buyout, Singtel is also looking to buy 21% of Thailand based Intouch Holdings Public Company Limited, which owns a majority stake in Thailand’s Advanced Info Services.
Currently, Temasek and Singtel jointly owns 39.78% of Bharti Telecom, and another 15.01% in Bharti Airtel via its subsidiaries including Pastel Ltd and Viridian Ltd, according to the Mint report. Once the deal subject to regulatory and shareholder approval goes through, Singtel will directly own 36.27% of Airtel India, making it the largest shareholder in Airtel. This is because the Mittal family, which owns a larger stake of 51% in Bharti Telecom, owns just under 30% in Airtel India, making Singtel the largest shareholder in Airtel’s India unit, added the report.
Note that prior to signing of this agreement to buy majority shares in Airtel India, In January 2014, Singtel received approval from the Foreign Investment Promotion Board (FIPB) for its proposal to buy out minority shareholders in Singtel Global (India) Pvt Ltd. It had received an approval for an investment of up to Rs 2.98 crore for this purpose. Singtel had initially applied for the FIPB approval of the proposed buyout in October 2013, after the government had allowed 100% Foreign Direct Investment (FDI) in telecom in July 2013. The proposal was once temporarily postponed by FIPB in November 2013 and was later deferred.
Interestingly, Singapore’s Singtel isn’t the only foreign company which is looking to acquire a higher stake in its Indian counterpart, after India allowed (FDI) in telecom in 2013:
In June, Russian conglomerate Sistema JSFC signed an agreement with the Russian Federation for State Property Management to buy back 17.14% stake owned by the federation in Sistema Shyam TeleServices (SSTL), an Indian subsidiary of Sistema JSFC.
– In October 2014, Telenor Group acquired 100% of the shares in its India unit Telewings held by Lakshdeep Investment & Finance. The process was finalized after Telenor received approval from the Indian government’s Foreign Investment Promotion Board (FIPB) to increase its stake from 74% to 100%.
-In September 2014, FIPB had deferred Verizon’s proposal to increase its stake in Verizon Communications India to 100% from the existing 74%. Verizon had previously setup Verizon Communications India by forming a joint venture with Videocon Group’s Leo Communications way back in 2007, as indicated by a NetworkWorld report.
-In April 2014, Vodafone group had bought out Vodafone India’s minority stakeholders like Analjit Singh and Piramal Healthcare to acquire 100% stake in the company. It had paid Rs 8,900 crore for Piramal Healthcare’s 11% stake and Rs 1,241 crore for Analjit Singh’s 24.65% stake.