Bharti Airtel’s Parent Bharti Telecom To Transition Into A Foreign-Owned Entity

The principal parent of India’s third-largest mobile operator may become a foreign-owned entity following its plans to pare debt.

Bharti Telecom Ltd. is seeking equity from its existing promoter group (which may include overseas entities) and Singaporean telecom firm SingTel, proportionate to their holdings in the mobile operator, according to a stock exchange filing by Bharti Airtel Ltd. This equity capital is for the purpose of deleveraging.

The privately-owned Bharti Telecom owns 41 percent of listed telecom service provider Bharti Airtel.

The Sunil Mittal family, that founded Bharti Airtel, currently holds 52 percent in Bharti Telecom, with SingTel owning the remainder 48 percent. If the capital raise results in an increase in foreign equity in Bharti Telecom to 51 percent or more that would make the Mittal-owned company a foreign-owned entity, as per the government’s foreign direct investment policy. In turn, Bharti Telecom’s entire stake in Bharti Airtel will be considered as foreign investment.

If that were to happen it would take total foreign investment in Bharti Airtel to 85 percent, according to a company spokesperson.

In its filing, Bharti Airtel also said it has applied for foreign investment limit of 100 percent to maintain headroom for foreign institutional investment and foreign portfolio investors. India’s FDI policy permits 100 percent foreign investment in telecom, but for investments beyond 40 percent government approval is required.

SingTel, the Economic Times newspaper reported today, is expected to raise its holding in Bharti Telecom to above 50 percent to pare the parent’s debt. That debt, according to Crisil, was around Rs 7,100 crore as of May 22—a fraction compared with Bharti Airtel’s net debt of around Rs 88,000 crore.