SINGTEL has sold 49 million of its shares in Bharti Airtel, amounting to a 0.8 per cent stake in its Indian associate, for 1,193.70 rupees per share to US-based investment firm GQG Partners.
On Thursday (Mar 7), the telecommunications provider estimated the deal to result in gross proceeds of about S$950 million.
It expects to net a gain of about S$700 million from the transaction, which was conducted on the National Stock Exchange of India and will be settled in rupees.
The sale shares are estimated to have a carrying value of about S$100 million. Their latest open market value stood at S$930 million based on the volume-weighted average price of Airtel’s shares on BSE and the National Stock Exchange of India.
Following completion of the sale, Singtel’s effective stake in Airtel will decrease to 29 per cent from 29.8 per cent.
Airtel has been an associate of Singtel since 2000 when the group first began acquiring stakes in it.
Since then, the Indian telco has grown to become the country’s second-largest mobile network operator after Reliance Jio. It is also the second-largest globally in terms of subscription volumes after China Mobile.
Based on Singtel’s February 2024 business update for the third quarter ended Dec 31, 2023, Airtel’s pre-tax contributions for the quarter were 15.9 per cent lower year-on-year at S$177 million.
The group’s net profit for the quarter sank 12.5 per cent on the year to S$465 million due to a higher net exceptional loss that came in part from Airtel, where one-offs mainly comprised a fair-value loss from its foreign currency convertible bonds.
While Singtel noted that Airtel continued to “execute strongly” with improvements in its operating profits across India and Africa, its overall Q3 net profit was “severely eroded” by the depreciation of local currencies in Africa – particularly Nigeria’s naira.
Group chief financial officer Arthur Lang said in Singtel’s Mar 7 announcement that he believes Airtel has “more room for growth”.
The group intends to remain invested in its India associate over the long term, while also working with Bharti Enterprises to equalise its effective stake in Airtel over time.
Commenting on the stake sale, Lang said the group is now in an even stronger position to execute its disciplined capital approach of balancing investing for greater growth and delivering strong, sustainable returns for its shareholders.
Lang added that it intends to improve total shareholder returns in the form of sustainably growing dividends and share-price appreciation.
In his view, Singtel’s current share price “does not reflect the intrinsic value or growth potential of the group”.
The counter gained S$0.02 or 0.9 per cent to S$2.36 as at 1.48 pm on Thursday, after the latest announcement.
Singtel in August 2022 announced that it was selling a 3.3 per cent direct stake in Airtel to its joint venture with Bharti Enterprises, Bharti Telecom, for S$2.25 billion.
This in turn contributed to the telco’s move to pay out a special dividend of S$0.05 per share for FY2023.
Group chief executive Yuen Kuan Moon had at the time commented that the dividend payouts bore testament to Singtel’s proven asset-recycling model.
