INDIA BUSINESS WORLD - May 2005
THE MONTH THAT WAS

SINGTEL RAISES BHARTI STAKE TO 30.84%, INFUSES $252MN

In a surprise move, Singapore Telecom (SingTel) has invested $252 million (Rs 1,108 crore) in Bharti Telecom Ltd (BTL) and increased its stake to 32.81%, from 26.96%. After this move, SingTel's beneficial stake in Bharti Tele-Ventures (BTVL) the listed telecom services arm of Bharti has gone up to 30.84%.

Bharti Enterprise and associates hold BTL, which in turn holds BTVL that operates Airtel cellular, landline, long distance (STD/ISD), Internet and broadband services. Now, BTVL's holding structure is: BTL, 45.9%, SingTel (15.74%), Warburg Pincus (5.74%) and the public (32.41%).

Recently, Bharti CMD Sunil Mittal had said in an interview that he was open to diluting stake in the telecom business to invest in new ventures like building airports and exporting fresh fruits and vegetables.

In another development, BTVL has decided to call off its long talked about sponsored ADR that would have put about 200 million equity shares on offer. Company officials said the two events were not related, in the sense that the ADR has not been call-off because of SingTel investment, although both the announcements have been made at the same time.

Said one official, in case of sponsored ADR the money would have gone to investors who would have sold their stake and not to Bharti. The company said that the board has decided not to proceed with the proposed sponsored ADR due to lack of sponsorship interest by most of its principal shareholders.

When the ADR plans were being drawn up, investor confidence in India was shaky. But now it seems that companies who have made investments in Bharti want to continue to hold their stakes.

Industry insiders feel that SingTel increasing its stake in Bharti by 2.7% is a positive move since it shows their renewed commitment towards Bharti. "For Bharti, this demonstrates a continued assurance from a partner that has had a long term interest in the market and the company,'' said Kobita Desai, principal telecom analyst, Gartner. Bharti can gain from additional funds and gain expertise for next generation networks from SingTel, she added. By 2007 the company plans to expand its coverage from the current 2,300 towns to 5,200.