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Singtel Buys 7.4% Stake in Bharti Telecom for $658M Just Before Mega Spectrum Auction

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Singtel Bharti Stake

India’s largest telco, Bharti Airtel, and Singapore’s largest telco, Singtel, have an existing partnership to provide high speed internet in 300 cities around the world. The two companies are making use of their expertise and operations to scale this joint venture.

If you were not aware of yet, the mega-spectrum auction has been approved by the cabinet and will be held from 1st September. The Government expects to raise Rs. 5.7 Lakh Crores from the auction of the premium 700Mhz spectrum and other various services and levies in the telecom sector.

Singtel’s strategic move has been to buy a stake in Bharti Telecom just before the spectrum auction, since the two have mutual beliefs and blocks of 700Mhz will benefit both the companies. Singtel is keen on getting a 7.39% stake in Bharti Telecom for around SGD 884 Million($658 Million). Singtel currently holds 15% interest in Bharti Airtel and 40% interest in Bharti Telecom.

The deal has been struck with Temasek Holdings, and Singtel also has plans to acquire a stake in Thailand’s Intouch Holdings, that owns Advanced Info Service telco. The combined deal will cost Singtel SGD 2.47 Billion or $1.84 Billion.

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

“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,” said Chua Sock Koong, CEO – Singtel, in a statement. Singtel holds stakes in other telcos across Asia as well and hopes to use their expertise to expand to unchartered regions.

India is an attractive market for telecom players considering the industry is not as regulated as other countries and there doesn’t exist a monopoly. Airtel is also India’s largest telecom player, followed by Vodafone and Idea, which provides Singtel the best opportunity at the moment.

This brings Singtel’s interest in Bharti Telecom to about 47.5%, which is fair to say is a lot for one company. However, this alliance should allow Airtel to improve its services in India as it bids for the most premium spectrum band in this auction.

Source: Airtel

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