‘Core investment’: Singtel junks reports of stake sale in Bharti Airtel

The Singapore-based telecom major Singapore Telecommunications Ltd (Singtel) has said its strategic investment in India's second-biggest telco Bharti Airtel remains "a core investment" in its international portfolio. The statement came after reports that suggested the Singtel group was planning to sell its stake worth up to $2 billion in Bharti Airtel to Bharti Telecom, a promoter company of Sunil Mittal-led Bharti Airtel. Both Singtel and the Mittal family hold key stakes in Bharti Telecom.

"We would like to make patently clear that we have been strategic investors in Airtel for decades and it remains a core investment in our international portfolio. As for the media hearsay, we do not comment on market speculation and abide by market disclosure rules pertaining to material transactions," Singtel says in a filing in the Singapore Exchange Ltd.

The company adds that one of its focus areas is to narrow the significant valuation gap, which its shares suffer from as it does not reflect the value of the holdings in our associates. "We have taken proactive steps to illuminate the value of our portfolio of strategic investments to deliver attractive returns for our shareholders," says the company.

This includes the divestment of the group’s 70% stake in ATN (Australia Tower Network), which owns Optus Towers. Singtel is also working with Gulf in Thailand to enhance value in its regional associate AIS, it adds. The company says it also partially divested 1.6% in Airtel Africa via a market placement to raise S$150 million as part of its capital recycling strategy.

Reiterating the importance of Bharti Airtel in Singtel's overall growth strategy, the company, in its FY22 financial result statement, says its regional associates’ pre-tax contributions last year rose 21% to S$2.07 billion, which was boosted by Airtel’s double-digit increase in "operating revenue and EBITDA as it staged a sturdy recovery in India".

Singtel’s profit for the full year grew two and a half times to S$1.95 billion, primarily due to a net exceptional gain from the group’s divestment of its 70% equity stake in Australia Tower Network. The company's underlying net profit improved 11% to S$1.92 billion, mainly lifted by "Airtel’s resilient turnaround".

"Our mobile business in Australia and our regional associate Airtel capped the year with solid performances to deliver good results," says Yuen Kaun Moon, group CEO, Singtel.

Bharti Telecom holds a 35.85% stake in Bharti Airtel, while Singtel and the Mittal family's effective shareholding in Bharti Airtel is 31.72% and 24.13%, respectively. The Singapore-based Singtel had become a shareholder in Airtel in the year 2000.

Sunil Mittal-led Bharti Airtel recorded a consolidated net income of ₹2,008 crore for the January-March quarter, posting a growth of 164.46% YoY. A major rise in net profit could be seen due to the net exceptional gain of ₹906 crore during the quarter ended March 31, 2022. Bharti Airtel's quarterly revenues stood at ₹31,500 crore, up 22.3% YoY.

With the current market capitalisation of ₹3,76,066.57 crore, Airtel remains among the top 11 biggest companies in India. Airtel stock, which closed 1.25% down at ₹685 today on the NSE, has risen 33.38% in the past year on improving profitability. The share, however, is down from the peak of ₹781.8 achieved in November last year.