Singtel has arranged to indirectly increase its stake in India's largest operator by subscribers Bharti Airtel to 39.5% with an additional 26.5 billion rupee ($412.6 million) investment.
Singtel subsidiary Singtel International Investments has arranged to subscribe to 85.45 million new shares in Bharti Telecom in a proposed preferential allotment. Bharti Telecom is the holding company of Bharti Airtel with a roughly 50.1% stake.
The allocation, which requires approval from Bharti Telecom's shareholders, would increase Singtel's stake in Bharti Telecom by 1.7%, which would in turn increase Singtel's economic interest in Airtel by 0.9 percentage points to 39.5%.
The deal can be seen as a vote of confidence in Bharti Airtel, which like all established Indian operators is struggling with high debts from recent spectrum auctions and intense competition triggered by the entry of Reliance Jio Infocomm.
These conditions have triggered a wave of consolidation in the sector, with Airtel having recently received approval to buy Tata Teleservices' consumer mobile business. But Airtel last month reported that its third quarter profit had fallen 39.3% as a result of these factors and a regulator mandated interconnection usage charge (IUC) cut.
“This is a good opportunity for us to deepen our strategic partnership with Airtel,” Singtel CEO International Arthur Lang said.
“While there are currently headwinds in India, we take a long-term view of our investment in Airtel which continues to be a strong market leader in a region with rapidly increasing smartphone penetration and mobile data adoption.”