Singapore Telecommunications Ltd. will trim 3.3% of its direct stake in India’s Bharti Airtel Ltd. to raise about S$2.25 billion ($1.6 billion), which it will use to finance its 5G operations and expansion.
The move will leave Singtel with a 36.36% stake in Airtel, which is India’s third-largest telecom operator by subscribers. Bharti Airtel shares fell as much as 11.56% on the news.
The sale comes as Indian telcos brace for intense competition from Reliance Jio Infocomm Ltd., which is owned by India’s richest man, Mukesh Ambani. Reliance Jio is expected to launch its own fifth-generation wireless services in the country later this year.
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Singtel said it will use the proceeds from the sale to fund its capital expenditure for fiscal 2020, which ends in March 2020. The company said it expects to invest about S$750 million in its network and information technology this fiscal year.
The sale is also part of Singtel’s ongoing efforts to deleverage its balance sheet and cut debt. As of March 31, 2019, the company had S$15.01 billion in net debt.
“This partial divestment allows us to deleverage further and free up resources for our ongoing investments in new growth areas such as digital transformation, data analytics and cybersecurity, as well as in spectrum to support our transition to a next-generation network,” said Singtel Group CEO Chua Sock Koong.
Singtel’s shares were up 0.65% in early morning trade on the news.
This is not the first time that Singtel has sold part of its stake in Airtel. In February 2018, the company sold about a quarter of its direct stake in Airtel for about S$780 million. The move comes as India’s telecom sector is in the midst of a consolidation. In March, Vodafone Idea Ltd., the country’s largest telecom operator by subscribers, announced that it would merge with India’s third-largest operator, Idea Cellular Ltd.
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The merger is still awaiting regulatory approvals and is expected to be completed by the end of this year. As per the deal, Vodafone will own a 45. This move will leave Singtel with a 36.36% stake in Airtel, which is India’s third-largest telecom operator by subscribers. Bharti Airtel shares fell as much as 11.56% on the news.
The sale comes as Indian telcos brace for intense competition from Reliance Jio Infocomm Ltd., which is owned by India’s richest man, Mukesh Ambani. Reliance Jio is expected to launch its own fifth-generation wireless services in the country later this year. Singtel said it will use the proceeds from the sale to fund its capital expenditure for fiscal 2020, which ends in March 2020. The company said it expects to invest about S$750 million in its network and information technology this fiscal year.
The sale is also part of Singtel’s ongoing efforts to deleverage its balance sheet and cut debt. As of March 31, 2019, the company had S$15.01 billion in net debt.
“This partial divestment allows us to deleverage further and free up resources for our ongoing investments in new growth areas such as digital transformation, data analytics and cybersecurity, as well as in spectrum to support our transition to a next-generation network,” said Singtel Group CEO Chua Sock Koong.
Singtel’s shares were up 0.65% in early morning trade on the news. This is not the first time that Singtel has sold part of its stake in Airtel. In February 2018, the company sold about a quarter of its direct stake in Airtel for about S$780 million.
The move comes as India’s telecom sector is in the midst of a consolidation. In March, Vodafone Idea Ltd., the country’s largest telecom operator by subscribers, announced that it would merge with India’s third-largest operator, Idea Cellular Ltd.
The merger is still awaiting regulatory approvals and is expected to be completed by the end of this year. As per the deal, Vodafone will own a 45.41% stake in the combined entity, while Idea’s promoters will own 26%. The remaining 28.59% will be owned by public shareholders. The combined entity will have about 408 million subscribers and a revenue market share of 32. This move will leave Singtel with a 36.36% stake in Airtel, which is India’s third-largest telecom operator by subscribers. For more articles visit homepage
