Singapore Telecommunications (SingTel) said that it will acquire the 7.39% of sovereign fund of Singapore Temasek in Bharati Telecom Ltd for a cost of $659.5 million
In a move that could be read as increasing confidence of overseas investors in the Indian telecom sector, state-owned Singapore Telecommunications (SingTel) on Thursday announced that it will acquire the 7.39% of sovereign fund of Singapore Temasek in Bharati Telecom Ltd for $659.5 million.
This takes SingTel's stake of 39% in the unlisted Bharti Telecom, parent of the largest telecom player in the domestic market Bharti Airtel, to 46.39%. The Mittal family holds 51% stake in it.
It also has raises the Singapore government-owned telecom company's holding Bharti Airtel from 33% to 36.6% through its direct and indirect stakes. Bharti Telecom holds 45.09% in Bharti Airtel.
Ashish Sharma, partner, PwC India, said one must not read too much into the realignment of the cross holdings of Temasek.
"One should not read too much into it. It is driven by internal streamlining of cross-holding. I don't think economic interest of Temasek will get impacted in any way. They (Temasek) own SingTel anyway," he said. G Krishna Kumar, Bangalore-based telecom executive, said the move sends a positive signal and enhances the brand value of the Bharti Airtel. He said it also conveyed investors' belief in the Indian telecom story. India's telecom sector has been growing at a healthy pace and is expected to further surge with data usage picking up in India with the launch of 4G services in India.
"It sends a positive signal on India's telecom sector growth. With data services expected to pick up with the launch of 4G services and Reliance Jio Infocomm's (Reliance Jio) entry in the market, the investors have started looking at the India 's telecom sector with confidence," he said. Krishna Kumar, however, doesn't see it impacting the spectrum auction to be held later this year. He believes SingTel consolidating its position in Bharti strengthens the Indian telecom player against Mukesh Ambani-owned Reliance Jio, which is expected to launch its long term evolution (LTE) and voice over LTE (VoLTE) services in the market soon.
The Singapore telecom firm also announced that it will acquire 21% stake in Thai telecom firm Intouch Holdings PCL. Many see this move as the Singapore sovereign fund realigning its telecom assets under SingTel. A statement issued by SingTel on Thursday said; "Singtel today entered into conditional share purchase agreements with Temasek to acquire 21% of Intouch Holdings Public Company and 7.39% of Bharti Telecom Ltd for a total consideration of Singapore dollar 2.47 billion" .
It said the acquisitions was a cash deal with Singtel paying Temasek Thai Baht 60.83 for each share of Intouch and Rs 235.62 for each share of Bharti Telecom. The Singapore company said the transaction will be subject to the fulfilment of certain conditions precedent, including shareholder and relevant regulatory approvals, and is expected to be completed by December this year. According to its statement, the deal will be funded through internal cash, short-term debt and proceeds from a share placement of 386 million new Singtel shares to Temasek totalling Singapore dollar 1.605 billion at a price of Singapore dollar 4.16 per new share.
"The acquisitions of the stakes in Intouch and Bharti Telecom, as well as the share placement are subject to minority shareholder and regulatory approvals. The acquisitions and share placement are interdependent and have to close at the same time," the statement said. SingTel bought a stake in Airtel's business in 2000 and with the Thursday's acquisition, it expects to increase its economic interests in it.
The company's statement said Thailand and India were fundamentally attractive markets which were reaping the benefits of rapidly increasing smartphone penetration and data adoption.
"Both AIS and Airtel are well-positioned to benefit from these trends. The recent mobile spectrum auctions in Thailand and ongoing industry consolidation in India have strengthened their competitive positions. They have also built for the future, securing significant spectrum for the long term and investing extensively in 3G and 4G networks and services," it said.
praveena.sharma@dnaindia.net
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
 "Internet")
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}