Bharti Airtel to consider proposal to sell controlling stake in Bharti Infratel

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KOLKATA: Bharti Airtel has said that it will consider a proposal from a clutch of global investors to buy its tower unit Bharti Infratel, by acquiring a sizeable chunk of its 58% stake.

Any sale of stake in Bharti Infratel will help India’s top telco pare debt and build a war chest to compete aggressively with moneyed new entrant Reliance Jio Infocomm, say analysts.

“Airtel has been approached by a few reputed global investors to acquire a significant stake in Bharti Infratel which, if accepted, could result in such investors acquiring control of Bharti Infratel,” India’s largest phone company said in a stock exchange filing Tuesday after market hours.

A committee of directors (CoD), constituted by the Bharti Airtel board a year ago to evaluate a stake sale in Bharti Infratel, has recommended that “such proposals would be duly considered”.

Airtel said the company would make “a disclosure in accordance with the relevant regulations if and when the board approves a transaction”.

The Sunil Mittal-led telco, however, said Bharti has “not entered into any agreements in relation to any such proposal or discussions, and there is no certainty of any transaction until such time the board reviews and approves a final proposal”.

In parallel, the Bharti Airtel board will also continue to evaluate selling shares in Bharti Infratel in one or more tranches, the company said.
Bharti Infratel, India’s only listed telecom tower company, closed Tuesday at Rs441.95, up 2.8%, on the BSE, giving it a market cap of Rs81,743.44 crore. Bharti Airtel had net debt of Rs 91,480 crore as on September 30.

Following the constitution of the COD last year, Bharti Airtel has till date sold off a total 13.96% of its shares in Bharti Infratel to private equity investors and through qualified institutional placements (QIPs).

Bharti Airtel currently owns 58% in Bharti Infratel while a consortium of private equity firm KKR and Canada Pension Plan Investment Board (CPPIB) combine holds 10.3% after its $952 million investment made in March this year. Subsequently, in August, Airtel had sold off another 3.65% stake in Infratel for Rs 2,570 crore at about Rs 380 a share. The remaining Infratel stake is held by the public shareholders.

The board of directors of Bharti Infratel in a meeting held on October 30 decided to explore and evaluate acquisition of stake in one or more tranches in Indus Towers, with the aim of making it a subsidiary or wholly-owned subsidiary of Bharti Infratel, the tower arm of Airtel had said in a stock exchange filing Monday.

ET, in its October 11 edition, had reported that Bharti Infratel could buy out all or most of the 58% shareholding of other partners – Vodafone India, Idea Cellular and Providence Equity Partners – in Indus Towers, in what was likely to be the first stage of a two-part deal.

ET further reported that the second stage was likely to see a consortium led by US buyout fund KKR, and including CPPIB, Abu Dhabi Investment Authority and GIC Singapore acquire an Indus-Bharti Infratel combined entity for $11 billion.