Singtel to fully subscribe to India telco Airtel’s rights issue for up to US$405M

Singtel store in Raffles City Mall in Singapore; taken August 2018.Singtel store in Raffles City Mall in Singapore; taken August 2018.

Singtel plans to subscribe to its associate Indian telco Airtel’s rights issue at 535 Indian rupees a share for up to 29.4 billion rupees, or around US$405 million over a period of up to three years, the Singapore-listed telco said in a filing to SGX Thursday.

The takeup of the rights represents Singtel’s full entitlement based on its 14 percent direct stake in Airtel, keeping the Singapore company as Airtel’s largest shareholder, the filing said,

“Our participation in this rights offering underscores our confidence in Airtel’s growth prospects. Not only will the Indian government’s recently announced reform package result in improved regulatory conditions supporting the healthy growth of the industry, it will also significantly improve Airtel’s liquidity to invest in becoming a truly digital-first company that will serve India’s digital vision,” Arthur Lang, Singtel’s group chief financial officer, said in the statement.

“Buoyed by the unprecedented wave of digitalisation, Airtel is currently delivering strong revenue momentum across all business segments, reflecting the strength of its portfolio. All this will in turn enable Airtel to contribute sustainably to Singtel,” Lang said.

Singtel said the rights issue will equip Airtel to invest in 5G capability.

“With smart phone users in India expected to reach over 900 million in the next two years and broadband connections growing at a steady clip each month, Airtel seeks to capture the tremendous opportunities in areas such as 5G, home broadband, data centres, cloud services and cyber security,” Singtel said.

Airtel’s India mobile business has seen strong market-share gains and industry-leading average revenue per user (ARPU), while its non-mobile businesses, such as broadband, have grown to more than 25 percent of total revenue, statement said.

Operations in Africa have also grown profitably and generated healthy cash flows, Singtel said.