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Bharti Airtel falls 2% after huge block deal

Around 104 million shares worth Rs 7,906 crore changed hands in three trades at Rs 750 apiece

September 07, 2022 / 09:49 AM IST
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Shares of Bharti Airtel Ltd opened 2% lower after a huge block deal of 1.09% stake, Bloomberg reported. Details of buyers and sellers are not known.

Around 104 million shares worth Rs 7,906 crore changed hands in three trades at Rs 750 apiece, CNBC TV18 said. At 9.40 am, Airtel was trading at Rs 749 on BSE, down 1.5% from its previous close.

In August, Reuters reported that Singapore Telecommunications or Singtel would sell a 3.3% stake in Airtel to Bharti Telecom Ltd (BTL) for $1.61 billion in the next three months. Singtel, Southeast Asia's largest telecom firm, said its units Pastel and Viridian would together sell 198 million shares they hold in India's second-biggest telecom operator.

After the deal, Singtel/Mittal family would hold 29.7%/25.6% in Airtel and both groups will work towards equalising their stake over time. "With Singtel’s selling entities domiciled in Mauritius, there are no capital gains tax implications and hence we expect the transaction to happen off-market," said IIFL Securities in a note to investors.

On a conference call, Singtel ruled out any equity infusion in BTL. "BTL thus has to raise debt to fund this $1.6 billion transaction but we believe that rising dividend payouts from Airtel should keep BTL’s debt in check. Airtel remains our top pick as it is well placed to benefit from continued RMS gains and tariff hikes," IIFL Securities added.

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"Singtel would use the deal proceeds to fuel its 5G capex and future growth initiatives. Its net debt to core profit should fall to 2.1x from 2.7x as of end-FY22 after this deal. Moreover, with Singtel’s one year forward enterprise value/core profit of 12.5x versus Airtel’s 8.7x, we do not see it selling further stake beyond the targeted equalisation of stakes between Singtel and Mittals," IIFL Securities said.
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first published: Sep 7, 2022 09:49 am
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