On Thursday, Singapore Telecommunications said that it has sold US investment firm GQG Partners a 0.8% share in India's Bharti Airtel for S$950 million, or roughly $711 million.
With this purchase, the largest telecom provider in Southeast Asia has increased the amount of cash it has recycled to S$8 billion since its strategic reset in 2021.
By selling 49 million shares, or 0.8% of the outstanding shares in Airtel, through its affiliate Pastel, SingTel effectively reduced its interest in the company by 0.8 percentage points.
Following the deal, SingTel will own an effective 29% share in Airtel, with a potential market value of approximately S$33 bilion. For a time now, the telecom has been selling its Airtel shares, including a straight 3.3% stake sale in 2022 for S$2.54 billion.
Without providing specifics regarding the difference with the divestment price, the group stated that it anticipates recording a gain of S$700 million from the stake sale.
As part of its ongoing efforts to increase shareholder returns, SingTel increased the dividend in November of last year to between 70% and 90% of the underlying net profit.
"Looks like a good move in terms of timing with Bharti Airtel share price up 56% in one year even exceeding consensus street target price of 1,175 rupees," said Sachin Mittal, analyst at DBS.
"SingTel's market cap is around only S$39 billion while the value of its stake in Bharti alone is S$33 billion. This also signals the true value of assets held by SingTel as the market is under-valuing Singtel's stock price by giving over 45% holding company discount," Mittal added.
Arthur Lang, Chief Financial Officer of SingTel, added that the company's current share price "does not reflect the intrinsic value or growth potential of the group." At S$2.35 a share, SingTel shares are currently trading 0.4% higher. With a share price of 1,207.4 rupees, Airtel is up 1.1%.
When Reuters asked Airtel and GQG Partners for remarks, they did not respond right away.
