Singtel has entered into a share purchase agreement (SPA) to sell a 3.3% direct stake in regional associate Bharti Airtel to Bharti Telecom, its joint venture with Bharti Enterprises, for SGD2.25 billion (USD1.61 billion). In a press release, the Singapore-based carrier noted that it will realise a net gain of SGD600 million from the divestment which forms part of a wider capital management initiative ‘to rebalance and optimise Singtel’s associates portfolio, including an increase in stake in Intouch Holdings, the parent company of Singtel’s regional associate AIS, and a partial divestment of Airtel Africa’.
The transaction is expected to take place at any time before 23 November 2022 and will leave Singtel with a 29.7% effective stake in Airtel, broken down as a 19.2% indirect stake through Bharti Telecom, and a 10.5% direct stake. Singtel will use the proceeds to fully fund its 5G CAPEX needs and growth initiatives in the next few years.
Commenting on the divestment, group CFO Arthur Lang said: ‘As long-term strategic investors and partners, the value of our stakes in our regional associates has risen substantially over the years but has not been properly reflected in our share price. This sale in Airtel will be our first ever and seeks to address this gap by illuminating the sizeable value of our holdings in Airtel. It is also part of our capital management approach to take monetisation opportunities that allow us to increase our return on invested capital and enhance total shareholder returns.’