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SingTel increases stake in India’s Bharti Airtel
Malaysian’s Maxis IPO will be biggest ever in South East Asia
by Ek Heng, Asia-Pacific Correspondent
Singapore telco incumbent, SingTel announced it was stepping up its stake in India’s largest telco, Bharti Airtel, by 1.52 percent that could cost it between US$393 million and US$656 million. The announcement last Friday said the acquisition, “Is in line with SingTel’s strategic focus on maximizing the value of its existing businesses.”
The payment for an additional 730,000 shares from Bharti Telecom, which has 45.3 percent stake in Bharti Airtel, will be done in three installments over 18 months and the prevailing market price will determine the amount of payment, according to India’s Economic Times paper. Bharti Airtel’s shares touched a 52-week low on October 30th at INR 290.3 a share (US$6.02).
The investment through SingTel’s fully-owned subsidiary Pastel Ltd will raise the Singapore telco’s stake in Bharti Telecom from about 32.81 percent to 36.16 percent. It will effectively increase SingTel’s stake in Bharti Airtel from 30.43 percent to 31.95 percent.
SingTel’s biggest acquisition to-date has been its S$14 billion purchase of Australia’s Optus in 2001. The Singapore telco was reportedly prepared to provide financial assistance until the recent failure in talks on the proposed merger between Bharti Airtel and MTN. SingTel’s announcement gave November 12th as the date to formalize the proposed purchase.
Maxis with mother of IPOs
In Malaysia, its biggest mobile telco by subscribers, Maxis Berhad (Maxis) looks set for relisting at an indicative price of M$5.20 (US$1.53) per share making it the biggest initial public offer in South East Asia valued at M$11.7 (US$3.44 billion).
It is much higher than initial industry estimates that placed the value earlier at US$2 billion. The listing of 2.25 billion Maxis shares is equivalent to 30 percent of the company but will involve only the domestic arm. Maxis Berhad is a subsidiary of Maxis Communications Berhad which has interests in telcos in India and Indonesia.
With 11.4 million subscribers amounting to more than 40 percent of total mobile subscribers in Malaysia, Maxis is a dominant player but market observers point out that the listing involves only its Malaysian operations which exclude the faster growing overseas markets.
In a statement, Maxis said that the focus of the IPO is on Malaysian business in view of its strong and stable cash flows for it to ‘be able to put forward an aggressive dividend policy to its shareholders. It added that it was targeting a payout ratio of not less than 75 percent of its net profit as dividends.
Bulk for institutions, just 2.83 percent for retail investors
Most of the shares to be listed will be for institutions, comprising 15.67 percent for global institutional investors, 11.5 percent for bumiputra institutions and selected investors with just 2.83 percent for retail investors.
“This exercise will see Maxis become one of the largest component stocks on the benchmark FBM KLCI of Bursa Malaysia,” said Arshad Raja Tun Uda, chairman of Maxis.
The IPO is being coordinated globally by CIMB Investment Bank, Goldman Sachs and Credit Suisse. Pricing for the IPO is expected to be finalized by November 10th with the shares to be listed on November 19th.
Malaysian billionaire, Ananda Krishnan has a 45 percent stake in Maxis Communications and Saudi Telecom owns 25 percent. The Malaysian billionaire also has stakes in the gaming and power firm Tanjong, pay TV operator Astro and satellite services company Measat.
More on this topic:
SingTel snags major network upgrade deal from ANZ
Singapore’s STT close to clinching majority stake in Ireland’s Eircom
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