Singapore Telecommunications (Singtel) has announced it intends to subscribe to regional associate Bharti Airtel’s rights issue at an issue price of INR535 per share for a total consideration of up to INR29.4 billion (approximately US$405 million) over a period of up to three years.
This represents Singtel’s full rights entitlement for its direct stake of 14%. Upon closing of the rights issue, Singtel will continue to be Bharti Airtel’s single largest shareholder.
According to Singtel, with the rights issue, Bharti Airtel will be equipped to invest in 5G capabilities and ride the digital growth momentum in India. This is part of Singtel’s strategic reset announced in May to build out digital ecosystems in the region through a multi-local strategy that could involve unlocking assets to reinvest in critical infrastructure that will power the digital economy.
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With smart phone users in India expected to reach over 900 million in the next two years and broadband connections growing at a steady clip each month, Bharti Airtel seeks to capture the tremendous opportunities in areas such as 5G, home broadband, data centres, cloud services and cyber security.
“Our participation in this rights offering underscores our confidence in Bharti Airtel’s growth prospects. Not only will the Indian government’s recently announced reform package result in improved regulatory conditions supporting the healthy growth of the industry, it will also significantly improve Airtel’s liquidity to invest in becoming a truly digital-first company that will serve India’s digital vision,” says Singtel’s group CFO Arthur Lang.
“Buoyed by the unprecedented wave of digitalisation, Bharti Airtel is currently delivering strong revenue momentum across all business segments, reflecting the strength of its portfolio. All this will in turn enable Bharti Airtel to contribute sustainably to Singtel,” Lang adds.
Bharti Airtel currently has operations in 18 countries across South Asia and Africa and a mobile customer base of over 440 million. It has been an associate of the group since Singtel acquired a stake in 2000.
Shares in Singtel closed flat at $2.47 on Sept 22.
