Sunil Mittal says Bharti Telecom will raise Airtel stake above 50% for long-term stability

Detailed summary

Bharti Airtel chairman Sunil Bharti Mittal said the promoter group would begin increasing its stake soon, with a target of crossing 50% to provide greater stability after his…

Bharti Airtel chairman Sunil Bharti Mittal said the promoter group plans to raise its stake in the telecom company above 50%, with the first steps expected in the near term. He said a larger promoter holding would help provide stability once he is no longer at the helm.

"I would say yes, and you will see some action coming in the near term," Mittal told CNBC-TV18 when asked whether there was greater urgency to consolidate the promoter group's shareholding.

Bharti Telecom, the promoter vehicle, held about 40% of Airtel at the time of the interview. Mittal said it would remain the group's sole promoter vehicle and that the aim was to take its holding beyond 50%.

The plan has gained urgency amid high-profile corporate disputes in India, including one involving a company where the majority shareholder holds as much as 66%. Mittal said such battles had added to the pressure to consolidate the holding.

"The battles that the country is witnessing today has, you know, pushed us to speed up this process," he said.

Raising the stake by 10 percentage points would cost an estimated $12 billion to $14 billion, Mittal said. The funds would come partly from dividends and share buybacks, with the promoters contributing the rest.

The process would begin with small increases in the holding this year, followed by further purchases annually over the next five to six years.

He added that about 3-3.25% of Airtel's shares were held outside Bharti Telecom and that the promoter group wanted to bring this stake into the holding company. Singapore Telecommunications, or Singtel, holds about 7% of Airtel outside Bharti Telecom.

Mittal said it remained to be seen how much of Singtel's holding could be transferred to the promoter vehicle, but added that both sides were aligned on taking the promoter stake above 50%.

Opening of the article, excerpted from CNBC-TV18. To read the rest, open the article on the publisher's site.