Bharti Telecom's Stake in Airtel to Exceed 50% as Singtel Parity Remains on Track

Bharti Airtel Chairman Sunil Bharti Mittal Outlines Vision for Consolidating Promoter Holdings

Sunil Bharti Mittal, the chairman of Bharti Airtel, has outlined his long-term vision for the telecom operator, which involves consolidating promoter holdings under Bharti Telecom and restoring the company's controlling stake to above 50%. Mittal, who has been reappointed as chairman for five years until September 30, 2031, believes that having everything through a single controlling promoter entity is essential.

Mittal's philosophy is rooted in the idea that Bharti Telecom, the founding promoter of Bharti Airtel, should hold a controlling shareholding of 51%. He aims to achieve this goal over the next decade by gradually handing over the business to the next generation. Currently, Bharti Telecom holds a stake of below 50%, and Mittal estimates that it needs to increase its share by around 10% to reach the desired threshold.

To achieve this goal, Mittal plans to consolidate holdings from Indian Continent Investment Ltd. (ICIL), Bharti family entities, and Singtel under Bharti Telecom over time. He also aims to equalize the ownership structure with Singtel, which currently holds a direct stake in Airtel and has been working toward parity in ownership economics with the Bharti family.

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The latest transaction between Bharti Airtel and Singtel has sharply reduced the gap in ownership, with the Singapore telecom operator now holding a direct stake of 7% and a 3.6% indirect stake. This decrease in the gap lowers the amount Singtel would need to divest over the coming years to achieve equalization.

Mittal believes that even after equalization, Bharti Telecom's holding should continue rising through stronger cash generation at Airtel. He aims to achieve this through increased dividends and buybacks, which would provide greater financial flexibility and cash generation to acquire additional shares.

To achieve his goal, Mittal is hoping for a continuous enhancement of dividend payments and potentially some buybacks in the next couple of years. This would give Bharti Telecom the necessary capacity to buy more shares and increase its stake in the company. While Mittal is eager to transfer his shares to Bharti Telecom immediately, he believes that the company needs a little more room and cash to make this possible.

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