Singtel to buy 7% stake in Bharti Telecom for $659.5 million

Singapore Telecommunications Ltd (Singtel) on Thursday said it will buy 7.39 per cent stake in Bharti Telecom Ltd, the holding company of India's largest telecom firm Bharti Airtel, for USD 659.5 million (over Rs 4,400 crore).

Singtel will acquire Temasek's 7.39 per cent stake in Bharti Telecom and another 21 per cent stake in Thai telecom firm Intouch Holdings PCL for a total consideration of 2.47 billion Singapore dollar (USD 1.8 billion).

Of this, it will pay Temasek Singapore Dollar 884 million (USD 659.51 million), for the stake in Bharti Telecom.

Bharti Telecom holds 45.09 per cent in Mumbai-listed Bharti Airtel Ltd. The Mittal family has 51 per cent stake in Bharti Telecom while Singtel held 39 per cent stake. Temasek held 7.39 per cent, which it is now transferring to Singtel as part of strategy to bring all telecom assets worldwide under the Singapore government entity.

"Singtel today entered into conditional share purchase agreements with Temasek to acquire 21 per cent of Intouch Holdings Public Company Ltd (Intouch) and 7.39 per cent of Bharti Telecom Ltd (Bharti Telecom) for a total consideration of Singapore Dollar 2.47 billion," Singtel said in a statement.

The acquisitions will be settled fully in cash.

Singtel will pay Temasek Thai Baht 60.83 for each share of Intouch and Rs 235.62 for each share of Bharti Telecom.

Bharti Airtel was trading 1.78 per cent higher at Rs 351.40 on BSE at 1250 hours.

The transaction is subject to the fulfilment of certain conditions precedent, including shareholder and relevant regulatory approvals, and is expected to be completed by December 2016, Singtel said.

Bharti declined to comment.

"This transaction 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.

Intouch is the biggest shareholder in Thailand's largest mobile operator Advanced Info Services Public Company Ltd (AIS).

Bharti Telecom is the holding company of Bharti Airtel Limited (Airtel), India's largest telecommunications company which has operations in 18 countries across South Asia and Africa.

"AIS and Airtel have been associates of the Group since Singtel acquired stakes in these businesses in 1999 and 2000 respectively. Through these acquisitions, Singtel will increase its economic interests in AIS and Airtel," the statement said

Chua Sock Koong, Singtel Group CEO, said, "Singtel has been a strategic partner to both AIS and Airtel for more than 15 years. We have built deep and trusted relationships, worked well together through the years, sharing knowledge and expertise and we have grown together, from strength to strength.

"Today, they have a combined mobile customer base of more than 380 million across Asia and Africa. This is a unique opportunity for us to deepen our relationships with two great market leaders."

The acquisitions are in line with the group's long-term strategy to increase exposure to high-performing associates in its portfolio of leading telecom businesses in the region.

Thailand and India are fundamentally attractive markets which are reaping the benefits of rapidly increasing smartphone penetration and mobile data adoption by a growing middle class, the statement said.

"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.

Chua added, "Thailand, India and Africa continue to be attractive, high-growth markets for us. As a Group, we enjoy great synergies, economies of scale, and collaborative innovation."

An independent financial adviser (IFA) will be appointed to advise the independent directors of the Board. The advice of the IFA and the recommendation of the independent directors will be sent to shareholders prior to the convening of a shareholders' meeting.

Temasek is an interested party and will abstain from voting at the meeting.