Govt allows up to 100% FDI in Bharti Airtel
22 January 2020
Bharti Airtel Ltd has received approval from the telecom department to increase foreign equity investment in the company to 100 per cent, allowing the telecom operator to raise more capital if and when required.
The Department of Telecom (DoT) has approved raising of foreign direct investment in Bharti Airtel to 100 per cent from 49 per cent allowed earlier, The company stated in a stock exchange filing today.
The company also has the approval of the Reserve Bank of India (RBI) that allows it to allot up to 74 per cent equity stake in the company to foreign investors.
"Bharti Airtel Limited has received the approval from the Department of Telecommunications (DoT) vide its letter dated January 20, 2020, for increasing the limit of foreign investment up to 100 per cent of the paid-up capital of the company," the filing said.
"The aforesaid approval read together with the RBI approval dated July 3, 2014 granted to the company allows the FPIs/FIIs to invest upto 74 per cent of the paid up capital of the company," it added.
The approval comes days before the company was to clear statutory liabilities of up to nearly Rs35,586 crore, including Rs21,682 crore in licence fee and Rs13,904.01 crore spectrum dues (excluding the dues of Telenor and Tata Teleservices).
At present promoter group’s Bharti Telecom holds around 41 per cent stake in Bharti Airtel and foreign promoter entities, including Singapore Telecommunications Ltd (Singtel) hold 21.46 per cent equity stake. Public shareholders have around 37 per cent shareholding in the company.
Singtel also owns 48 per cent in Bharti Telecom, which gives it a 35 per cent interest in Bharti Airtel. Government approval will allow Singapore Telecommunications Ltd or Singtel, which already owns 35 per cent stake in Bharti Airtel, to increase its stake in the Indian company.
It may be noted that the RBI approval, granted to the company in July 2014, allows the FPIs/FIIs to invest up to 74 per cent of the paid-up capital of the company.
Bharti Airtel would now be able to raise more funds from foreign investors to pay for statutory dues, network expansion and for spectrum auction payments in case it bids.
Earlier, Bharti Telecom, a promoter of Bharti Airtel, had sought government nod for the infusion of Rs4,900 crore investment from Singapore-based Singtel and other foreign entities.
The fund infusion will enhance foreign shareholding in Bharti Telecom to over 50 per cent that will make it a foreign-owned entity.
Sunil Bharti Mittal and his family currently own around 52 per cent stake in Bharti Telecom which, in turn, holds around 41 per cent stake in Bharti Airtel while foreign promoter entities hold 21.46 per cent stake in the telecom firm. Public shareholders have around 37 per cent stake in the company.
The move would enable Bharti Airtel to raise more funds from foreign investors to ward off the threat of a tariff war with Reliance Jio. It would also allow Singtel, which owns a 35 per cent stake in Bharti Airtel, to increase its stake in the Indian telco.