Singtel - but not SoftBank - may shake up Airtel ownership

Singtel and SoftBank may shake up Airtel ownership

UPDATE: Bharti Airtel has dismissed speculation that it could sell a stake to Japanese operator SoftBank after CNBC reported that the companies were holding preliminary discussions over a possible investment.

A statement from Airtel to the Bombay Stock Exchange read: “at this juncture, there is no proposal for sale of [a] stake in Bharti Airtel either directly or indirectly.” Reports in local media indicated that SoftBank was open to acquiring a holding in Airtel or its majority shareholder Bharti Telecom.

Airtel did not deny reports that Singapore’s Singtel is keen to increase its stake in the holding firm Bharti Telecom, which holds 41% of Bharti Airtel, making it the operator’s single largest shareholder. The company's ownership is split 8:52 between Singtel and the Sunil Mittal family, so it is majority Indian-owned; however, The Economic Times has reported that Singtel is looking to increase its stake in Bharti Telecom to over 50%, which would result in the holding company being reclassified as majority foreign-owned.

This in turn would affect Bharti Airtel’s ownership status, as Bharti Telecom’s 41% stake would be reclassified as non-domestic equity – and so Bharti Airtel would go from being 43% foreign-owned to 85%. Current regulations stipulate that the government must grant approval for any overseas holding of over 50% in an Indian operator.

ET reported that Bharti Telecom is looking to reduce debt via further investment from Singtel, and is reportedly looking to court further investment by seeking approvals to become 100% foreign-owned. Singtel also has a 35% direct stake in Bharti Airtel.

In addition to Singtel, Japan’s SoftBank is reportedly keen to acquire either a direct or indirect stake in Airtel. According to CNBC, talks are in preliminary stages and no details about the size or price of any holding have been disclosed.

SoftBank has a history with Airtel, having formed a joint venture with Bharti Enterprises focused on e-commerce and social media. In addition, it pledged investment for Airtel Africa last year.

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