Singtel reduces stake in India's Bharti Airtel with $709M deal

Singtel Group announced Thursday the sale of a 0.8% stake in India's Bharti Airtel for 950 million Singapore dollars (US$709 million) as it continues to seek ways to fund the growth of its data center and IT services businesses.

The group sold the shares to US-based investment firm GQG Partners.

Capital recycling efforts

Singtel expects to gain an estimated SG$700 million ($522.1 million) from the stake sale, which is part of ongoing capital recycling efforts to unlock value from its assets. To date, the company has brought in a total of SG$8 billion ($6 billion) in recycled capital since its strategic reset in 2021.

The telco operator said capital recycling has allowed the company to fund the growth of its data center and IT services, as well as reduce net debt by SG$3.2 billion as of end September 2023.

"The group is now in an even stronger position to execute our disciplined capital approach of balancing investing for greater growth and delivering strong, sustainable returns for our shareholders," said Arhtur Lang, CFO, Singtel Group, in a statement.

Improving shareholder return

According to Lang, Singtel last November raised its dividend policy to between 70% and 90% of underlying net profit and are on track to pay at the upper end of that range this financial year.

Related:Singtel sells 20% of its data center arm to fund expansion in Southeast Asia

"We will look at actions to improve total shareholder returns via sustainably growing dividends and share price appreciation. We believe the current share price does not reflect the intrinsic value or growth potential of the Group," Lang added.

The move cuts Singtel's ownership of Airtel to 29%, worth an estimated SG$33 billion ($24.6 billion). In 2022, the Singaporean telco operator previously sold a 3.3% stake in Airtel for approximately SG$2.54 billion ($1.9 billion).

"Airtel continues to see steady growth across all its businesses and has been rewarded with strong market valuations. We believe there's more room for growth given India's accelerated digital transformation and we intend to stay invested for the long term while working with Bharti Enterprises to equalize our effective stake in Airtel over time," said Lang.