Singtel is planning to raise its holding in Bharti Telecom, the single largest shareholder in Bharti Airtel, to beyond 50 per cent. The move will convert the holding company into a foreign-owned entity and, consequently, take overseas ownership in Bharti Airtel to over 85 per cent.
At present, Bharti Telecom’s 41 per cent equity stake in Bharti Airtel is classified as ‘domestic’ shareholding as a majority share of 52 per cent is owned by the Sunil Mittal family.
As per industry sources, even a small rise in Singtel’s shareholding in Bharti Telecom, which currently stands at 48 per cent, will result in a reclassification of Bharti Telecom as a ‘foreign’ investor since it will then be majority-owned by the Singapore-based company. Post this reclassification, Bharti Telecom’s entire 41 per cent stake in Bharti Airtel will be considered foreign equity. As a result, foreign shareholding in Bharti Airtel could increase from the current 43 per cent to 85.07 per cent.
Earlier in July 2019, Bharti Airtel had sought government approval to increase its foreign shareholding to 100 per cent to make the proposed changes compliant with the foreign direct investment (FDI) norms. The existing FDI norms allow 49 per cent foreign investment under the automatic route while anything between 50 per cent and 100 per cent needs to be cleared by the government.