Bharti Airtel's stock rose 1.38 percent on the Bombay Stock Exchange on Thursday following the announcement by Singapore Telecommunications (Singtel) that it would increase its stake in the Indian company as part of its strategy to boost its exposure in emerging markets.
Singtel has entered into conditional share purchase agreements with state investor Temasek to buy a 21 percent stake in Thailand's Intouch Holdings for S$1.58 billion and an additional 7.39 percent stake in Bharti Telecom Limited for S$884 million, reported CNBC. Singtel already owns a 39.78 percent stake in Bharti Telecom.
"These two transactions allow us to increase our economic interest in two companies, Advanced Info Services (AIS) and Bharti Airtel, and to operate in two countries where we think there will be a lot more economic growth," Chua Sock Koong, group chief executive officer at Singtel Group, was quoted as saying by CNBC.
The acquisitions will be settled entirely in cash and the transaction would be funded through internal cash, short-term debt and proceeds from a share placement of 386 million new Singtel shares to Temasek, totalling S$1.605 billion at a price of S$4.16 per new share, the company said in a statement.
The acquisitions of the stakes in Intouch and Bharti Telecom, as well as the share placement, will be subjected to minority shareholder and regulatory approvals.
According to the Singapore-based firm, Thailand and India are fundamentally attractive markets, which are reaping the benefits of rapidly increasing smartphone penetration and mobile data adoption by a growing middle class.
Intouch is the biggest shareholder in Thailand's largest mobile operator, Advanced Info Services Public Company Limited (AIS). On the other hand, Bharti Telecom is the holding company of Bharti Airtel Limited (Airtel), India's largest telecommunications company.
"Thailand, India and Africa continue to be attractive, high-growth market for us. As a group, we enjoy great synergies, economies of scale and collaborative innovation," Koong further said.
Singtel will pay Temasek THB60.83 for each share of Intouch and Rs.235.62 for each share of Bharti Telecom and an independent financial adviser (IFA) will be appointed to advise the directors of the Board, the company said.
Singtel is one of the largest listed Singapore companies on the Singapore Exchange by market capitalisation. The company has more than 130 years of operating experience.
Bharti Airtel stock was trading at Rs. 350 at around 11:03 a.m. on BSE on Thursday.