The proposed partnership deal between Bharti Airtel and South Africa’s MTN may not necessarily result in huge dilution of Singapore Telecommunications Ltd (Singtel), which holds a 30 per cent stake in Bharti.
A source familiar with the deal said that Singtel finds India an important market and is exploring ways such that it does not have to dilute its equity in the company, if the Bharti-MTN deal goes through.
Singapore’s largest company by market capitalisation, Singtel neither confirmed nor denied the development.
“Discussions between Bharti and MTN are ongoing at this stage and as stated in Bharti’s press release, SingTel will remain a significant shareholder and strategic partner in Bharti post any successful transaction,” said a Singtel spokesperson in written reply to Hindustan Times.
“Consistent with our approach as a strategic investor and equity accounting for our investments, we will continue to equity account for Bharti, in its enlarged form post the transaction if this is successful,” the spokesperson said.
On May 25, Bharti Airtel announced a “strategic partnership deal” with a broader objective to achieve a “full merger” with MTN. The announcement said that MTN and its shareholders would acquire about 36 per cent economic interest in Bharti, of which 25 per cent would be held by MTN and the rest will be held by MTN shareholders.
In turn, Bharti would acquire about 49 per cent shareholding in MTN.
By virtue of its 30 per cent holding in Bhrati Airtel, Singtel’s stake in the post-merger scenario should fall to about 19 per cent. “However, Singtel is looking at higher stake in India operations,” said the source. “The company would like to maintain the present level of equity.”
Goldman Sachs is advising Singtel on this deal, the source said, adding that Singtel is willing to extend financial support to Bharti for the deal. The size of the two-way deal is about $23 billion.