Bharti Telecom, the parent company of Bharti Airtel, is planning to consolidate its position in the telecom market by increasing its shareholding in the telecom company.
According to the latest filing by Bharti Airtel on the stock exchange, Singapore telecommunications Limited (Signtel) which owns 31.7% stake in Bharti Airtel Limited, would transfer a 3.33% stake to Bharti telecom for a consideration of 2.25 billion Singapore dollars.
As of now the shareholding of Bharti Airtel is in such a way that Bharti Enterprises, the Indian conglomerate company founded by Sunil Bharti Mittal, owns a 35.85% stake in the telecom company. Singapore telecommunications Limited Singapore also known as Signtel owns a 31.7 per cent stake in the company. American multinational technology company, Google LLC also owns a 1.28% stake in Bharti Airtel.
The deal which is expected to be completed in 90 days will effectively bring down the shareholding of Singtel group in Airtel to 29.7%.
Chairman and chief executive officer of Bharti Airtel, Sunil Bharti Mittal, said that after the transaction is closed Bharti telecom will remain the principal vehicle which holds the controlling shares in Bharti Airtel. He also added that Bharti Enterprises and Singapore telecommunications Limited will work in the meantime on equalizing their effective stake in the telecom company.
It is important to note that Bharti telecom, which is the holding company of Airtel is owned by both Bharti Enterprises and Signtel by 50.56% and 49.44% shareholding respectively.
Market analysts and investment experts are of the opinion that the move by the holding company to purchase shares from Signtel and increase its holdings in Airtel is a piece of very positive news. Even though are risk involved in increasing the shareholding by pitching in a large amount of money such as 12000 crore rupees, the prospects of the telecom industry in India and the possibilities of cash flow to Airtel make it an attractive stock to consolidate.
The possibilities of growth of the 5G industry in India could also be one reason why Bharti is consolidating its market position in the Indian telecom market.
With more than 474 million members as of June 2021, Bharti Airtel is the second-largest telecom operator in India. With a worldwide presence in more than 18 countries across various geographical locations, it is also the second-largest mobile network operator in the world just below China mobile communications Corporation. The telecom company has a revenue of more than 50 billion US dollars and an operating income of 1.3 billion dollars.