Bharti Telecom to sell $1bn stake in Airtel

Bharti Telecom to sell $1bn stake in Airtel

26 May 2020 | Natalie Bannerman

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Bharti Telecom, parent company of Bharti Airtel (Airtel), has announced plans to sell a $1 billion stake in Airtel.

The proposed sale of approximately 2.75% of Airtel, comes as the company attempts to cut its debts and reinvest more funds in the business.

Sources close to the matter say that the sale is likely to be a ‘block deal’ with details about the buyers, undisclosed.

According to the Economic India Times, the buyers are likely to include global investors such as Fidelity, Segantii Capital and Norges Bank as well as local funds such as HDFC Mutual Fund, SBI Mutual Fund and Birla Mutual Fund.

Airtel’s rival Jio has similarly had its parent company Reliance Industries, looking to divest 20% of the company.

Most recently the company sold a $5.7 billion stake in the company to content giant, Facebook.

Specifically, Facebook now owns a 9.99% stake Jio Platforms, the services arm of Reliance Industries. 

In addition, Reliance has raised a further $1.5 billion for a stake in Jio Platforms to global investment firm KKR.

Other investors in Silver Lake, Vista Equity Partners, General Atlantic, bringing the total amount raised to $10 billion.

With a debt of $1 billion, analysts expect Airtel to start turning a profit by year end.

Speaking to the Economic India Times Bank of America Merrill Lynch, is quoted as saying, “Bharti remains a secular story for us and we expect the company to show continued ARPU improvement and market share gain going forward”.

While Rohan Dhamija, a partner at Analysys Mason, said any stake sale by Bharti Telecom would be well times as it would help the company manage its debt effectively at the promoter level and allow it to inject fresh capital into Airtel.