Singapore Telecommunications announced the sale of a 0.8% stake in India's Bharti Airtel for S$950 million (approximately $711 million) to U.S. investment firm GQG Partners. This move is part of Southeast Asia's largest telecom operator's ongoing capital recycling efforts, totaling S$8 billion since its strategic reset in 2021.
SingTel, through its unit Pastel, divested 49 million shares, equivalent to 0.8% of Airtel's outstanding shares, thereby reducing its stake by the same percentage. Following the transaction, SingTel will retain an effective 29% stake in Airtel, valued at around S$33 billion. The telecom company has been gradually selling Airtel shares, including a direct 3.3% stake sale for S$2.54 billion in 2022.
The anticipated gain from this recent stake sale is expected to be S$700 million, though specifics on the divestment price were not disclosed. SingTel has prioritized enhancing shareholder returns, exemplified by raising dividends to 70-90% of underlying net profit in November 2023.
Analyst Sachin Mittal from DBS praised the timing of the move, considering Airtel's share price surge of 56% in the past year. He emphasized that SingTel's market cap is S$39 billion, while its Airtel stake alone is valued at S$33 billion, indicating an undervaluation of SingTel's stock price by over 45%.
Arthur Lang, SingTel's finance chief, highlighted that the current share price does not reflect the intrinsic value or growth potential of the group. As of now, SingTel shares are trading 0.4% higher at S$2.35, and Airtel shares are up 1.1% at 1,207.4 rupees per share. Airtel and GQG Partners have not responded to Reuters' request for comments.
