Bharti Telecom, the holding company owned by Indian businessman Sunil Mittal and Singapore’s SingTel, has reportedly decided to boost its stake in Indian telco Bharti Airtel to more than 50% via open market purchases rather than a direct acquisition.
Bharti Telecom, the holding company owned by Indian businessman Sunil Mittal (pictured) and Singapore’s SingTel, has reportedly decided to boost its stake in Indian telco Bharti Airtel (NSE:BHARTIARTL) to more than 50% from 43.96% via open market purchases rather than a direct acquisition.
The holding company had initially planned to buy Mittal family-owned investment firm Indian Continental Investment’s (ICIL) 6.65% stake in Airtel, the country’s largest mobile operator, the Economic Times reported. But while this would have seen SingTel’s economic interest rise and the Mittal family’s fall, the new plan will see them both increase their ownership, the report noted.
Bharti Telecom, in which the Mittal family has a 51% stake, SingTel a 40% stake and Singapore investment firm Temasek a 7% stake, will partly fund the stake increase in Airtel with the proceeds of a Rs25.03bn (US$364.4m) rights issue, the report stated.
The Mittal family and SingTel will both subscribe to the rights issue to maintain their proportionate ownership of Bharti Telecom. SingTel said in a statement early this month that it would inject Rs9.96bn (US$145m) into the holding company as part of the capital hike.
“The entire proceeds of the [rights] issue along with the proposed borrowing will be utilised to acquire further equity shares of Airtel with an intention to ultimately make Airtel a subsidiary of the company [Bharti Telecom]”, the report cited a notice on the rights issue saying.
Bharti Telecom will increase its stake in Airtel “over a period of time”, the report stated, noting that it would need more than Rs80bn (US$1.16bn) to boost its stake by over 6% at current market prices.
Sunil Mittal is the founder and chairman of Bharti Enterprises and Airtel is its flagship company.
Airtel and SingTel were not immediately available for comment, while Bharti Telecom was not reachable.
