Bharti Airtel promoter Bharti Telecom Ltd. will buy a 3.33% Bharti Airtel stake from Singtel for 2.25 billion Singapore dollars, or about ₹12,895 crore, in 90 days' time, the telecom operator said on Thursday.
Bharti Group chairman Sunil Bharti Mittal's family and Singtel are co-investors in Bharti Telecom Ltd. (BTL).
Singtel, in a statement, said that after the transaction, Singtel Group is expected to own an effective stake of 29.7% in Bharti Airtel, which is estimated to be worth Singapore Dollar 22 billion (about ₹1.26 lakh crore).
"After this inter-se transaction, Bharti Telecom will remain the principal vehicle to hold controlling shares in Airtel. Bharti Enterprises and Singtel to work towards equalising their effective stake in Airtel over time," Mr. Mittal said.
The share purchase is expected to be completed over a period of 90 days.
Singtel at present holds 50.56% stake in Bharti Telecom and Mittal family holds 49.44%.
Bharti Telecom at present holds 35.85% stake in country's second largest telecom service provider Bharti Airtel.
"Singtel and its affiliates have entered into an agreement to transfer approximately 3.33% shares to BTL for an aggregate amount of approximately 2.25 billion Singapore dollars (SGD), leaving direct shareholding of Singtel and Bharti in Airtel at around 10% and 6% respectively," Bharti Airtel said in a regulatory filing on Thursday.
"Bharti and Singtel have agreed to work towards equalising their stake in Airtel over a period of time," the filing said.
Singtel also has plans of partial disinvestment of Airtel Africa.
The transaction is expected to crystalise an estimated net gain of Singapore Dollar 0.6 billion, about ₹3,439 crore, on divestment for Singtel.
Singtel chief financial officer Arthur Lang said that as long-term strategic investors and partners, the value of Singtel's stake in regional associates has risen substantially over the years but has not been properly reflected in the company's share price.
"The sale in Airtel will be our first ever and seeks to address this gap by illuminating the sizable value of our shareholding 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 shareholders returns," Lang said.
Singtel said that the transaction will follow a number of capital management initiatives to rebalance and optimise Singtel's associates portfolio including an increase in Intouch Holdings, the parent company of Singtel's regional associate AIS and a partial divestment of Airtel Africa.
Singtel plans to invest Singapore Dollar 2.25 billion raised from this transaction into 5G services and growth initiatives in the next few years, Lang added.
Bharti Airtel has posted an over five-fold jump in its consolidated profit to ₹1,607 crore for the quarter ended June, mainly on account of hike in tariffs. The company had posted a profit of ₹283.5 crore in the same period a year earlier.
Consolidated revenue from operations of Bharti Airtel increased by about 22% to ₹32,805 crore during the reported quarter from ₹26,854 crore earlier.
Bharti Airtel's total customer base grew by 4.7% on a year-on-year basis to 49.69 crore, with India accounting for 36.24 crore subscribers.
