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Singtel’s capital infusion bodes well for incumbents, says Fitch Ratings

February 06, 2018

According to Fitch Ratings, Singapore Telecommunications Limited’s (Singtel) continued capital infusion in Bharti Telecom, the holding company of Bharti Airtel, reflects the company’s desire to capitalise on the long term growth prospects offered by the Indian telecom sector. This is also an indicator of the easing of financial pressure on incumbents in 2018, the agency said.

Further, Fitch expects a gradual price discipline in the telecom sector to drive mid-single-digit revenue recovery in 2018. The ratings agency believes that Singtel’s move is an indicator that the rock bottom has been reached and the sector is poised towards a gradual revival.

Singtel has increased its stake in Bharti Airtel by investing Rs 26.49 billion in Airtel’s parent company Bharti Telecom Limited by way of preferential allotment of shares. As per the agreement, Singtel International Investments, a wholly owned subsidiary of Singtel will be allotted up to 85.45 million new equity shares in Bharti Telecom at an issue price of Rs 310 each. With this transaction, Singtel’s total stake in Bharti Telecom will increase to 48.90 per cent from 47.17 per cent. The transaction is expected to be completed by March 2018. Earlier, Singtel acquired stake in Bharti Telecom from Temasek Holdings in August 2016.

Meanwhile, Fitch recently revised India's telecom sector outlook from negative in 2017 to stable in 2018. According to Fitch, industry consolidation has strengthened the competitive position of the top telecom operators even as smaller operators made an exit from the sector.




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