Singapore PSU Temasek plans to acquire stake in Bharti Teleservices and TataSky
The Singapore government investment arm Temasek Holdings has announced that it is set to take equity stakes in India's leading mobile phone operator Bharti teleservices and direct-to-home (DTH) operator TataSky
Temasek came under fire in Thailand for buying a controlling stake in Shin Corp, which formerly owned the television operator iTV Plc until the government took it over and changed its name to TITV. Now the state-run company wants to take a 4.99% stake in Bharti Airtel, one of India's largest mobile phone operators, and a 10% stake TataSky, India's leading DTH operator.
The deals could be the largest private equity transactions in India. Bharti Enterprises, the holding company that owns Bharti Airtel, will marginally increase its stake from 45%, while the combined holdings of Temasek and Singapore Telecom (SingTel) will go up to 36%. Temasek owns 56% of SingTel, which already has a 30.5% stake in Bharti Airtel.
SingTel says it will have first rights to Temasek Holdings' stake in Bharti Airtel and Bharti's 4.99% stake.
Temasek was granted an option to buy the stake from Bharti Enterprises on July 3, but no financial details were revealed. Bharti executives refused to divulge the deal size or a timeframe for negotiations. At current market prices, the stake is worth $2 billion.
Vodafone had picked up a 10% stake in Bharti Airtel in 2005 for $1.5 billion. However, following its acquisition of a majority stake in Hutch-Essar for $10.9 billion, Vodafone entered into a share sale agreement with Bharti to sell back the 5.6% direct stake in Bharti Airtel for $1.6 billion. Vodafone will continue to hold its 4.39% indirect stake in Bharti Airtel.
This will be Temasek's second investment in a telecom company in India after it bought 9.9% of Tata Teleservices.
Mobile phone companies in India have seen sales and profits surge as the economy has boomed in recent years. India has been adding nearly six million new connections every month, which makes it the world's fastest growing mobile phone market.
Bharti Airtel competes with Reliance Communications, government-owned Bharat Sanchar Nigam Ltd and Hutchison Essar.
On June 9, the direct-to-home (DTH) venture Tata Sky offloaded 10% stake to Temasek for $56 million. Temasek has the option to increase its stake further to the permissible limit of 26%. With the move, Tata's stake in the company has dropped to 70%.
Incorporated in 2004, Tata Sky started off as an 80:20 joint venture between the Tata Group and television network Star. It launched DTH service last year. The joint venture partners had earlier stated that the project would cost them about $750 million.
Tata Sky has a total subscriber base of more than half a million, and intends to increase it to one million by August.
The competition in the DTH market is heating up with the proposed entry of cash-rich companies such as Reliance, Bharti and Sun TV. Tata Sky is now the market leader. At the current rate of the growth, India would have anything between 15 million and 20 million DTH subscribers in the next five to six years.
Source : Bangkok Post