Airtel remains a core investment in our international portfolio: Singtel

On Friday, the Singapore-based telecom company, Singtel made its intent about strategic investments in associate telcos (which include Bharti Airtel) clear. In a press statement, the company dubbed as "market speculation" reports about its intention to sell 1-2 per cent of its stake in the Indian telecom major for around $1-2 billion. The company reiterated that, "we have been a strategic investor in Airtel for decades and it remains a core investment in our international portfolio."

In the statement, Singtel said that as per the “strategic reset” their focus area is to narrow the significant “valuation gap” which Singtel shares suffer from as it does not reflect the value of its holdings in their associates.

“We have taken proactive steps to illuminate the value of our portfolio of strategic investments to deliver attractive returns for our shareholders” it said in the statement released on Friday morning. To illustrate the point, it gave examples of its divestment of 70 per cent stake in ATN which owns Optus Towers, working with Gulf in Thailand to enhance value in the regional associate and a partial divestment of 1.6 per cent in Airtel Africa via a market placement to raise $150 million as part of the capital recycling strategy.

Singtel also reiterated the importance of Bharti Airtel in its overall strategy, especially its profitability, in its press release on its financial results for FY22 which was also declared today. The company in its press statement said that its underlying net profit improved 11 per cent to Singapore $1.92 billion “mainly lifted by Airtel’s resilient turnaround”.

The Singapore company made it clear again that the company’s regional associates pre-tax profit contribution grew by 21 per cent to Singapore $2.07 billion “driven by Airtel’s double-digit growth in operating revenue and EBIDTA as it staged a sturdy recovery in India and saw a sustained growth in its African operations”. In its investor presentation Airtel contributed S$432 million to Singtel’s profit before tax accounting for over a fifth of its PBT from regional associates in FY22. In FY21 Airtel's contribution was only S$23 million accounting for only 1.3 per cent from regional associates.

Singtel’s effective stake in Bharti Airtel is at around 31.7 per cent and it holds 49.44 per cent in the Mittal owned holding company Bharti Telecom.

The Bharti Airtel stock, despite a substantial fall in the overall market, has held on to its price in the last five days.