Mittal eyes 51% stake for Bharti Telecom in Airtel

To hand over reins to next generation in a decade
Sunil Bharti Mittal has set his sight on Bharti Telecom regaining controlling stake of 51% or just over 50% in Bharti Airtel over the next decade and hand over reins to his children in the same timeframe. Mittal, 68, spoke about his vision at his surprise participation in the company’s earnings call Thursday, a day after being reappointed Bharti Airtel chairman for another five-year term.

“My own wish is that in the next decade, as I come to a point where I hand over the reins to the next generation, Bharti Telecom should get back to controlling shareholding of 51% or just over 50%,” Mittal, chairperson of Bharti Enterprises and promoter of Bharti Airtel, said.

Bharti Telecom has about 40.5% stake in Airtel, which Mittal had founded in 1976. Along with the Mittal family-owned Indian Continent Investment Ltd (ICIL), Singtel-backed Pastel and other promoter entities, they together have about 48.9% stake in Airtel.

“The principal direction or vision... is all shares that we can (get) from both ICIL or Bharti family entities, and Singtel should go into Bharti Telecom as much as possible. Bharti Telecom should be the controlling promoting shareholder,” he said.
Mittal, whose current term as company chairman was due to expire on Sept 30 and has been reappointed for five years till Sept 30, 2031, said a good amount of cash in hand is needed to raise Bharti Telecom’s stake by 10% in Airtel — an investment of about Rs 1 lakh crore based on present share price and the company’s market capitalisation.

“You know, basically the belief remains that you must have everything through one company that should be the controlling, promoting shareholder. Bharti Telecom, as you know, historically has not only been the founding promoter of this company (but has also) had almost always for a long period of time, a controlling shareholding of 51%,” Mittal said, adding that the shareholding in Airtel can be raised in next three-to-four years, depending on the company’s performance, giving out more dividends and generating cash flow to put more cash in hand for Bharti Telecom to achieve the target.

“To put a bit more granular sort of angle, Singtel has a 7% direct stake in Airtel and it had about 6% to equalise. Now with this transaction, once this is done and shares are issued, the gap will come down to 3.6% (for a target of 51%). We should see an overall gap dramatically reducing, and Singtel, which has been on the path of selling down its direct stake, has to sell now much less than earlier,” he said.

Mittal also said even Airtel should make an attempt to have a higher share in Airtel Africa, around 90%. The Airtel board on Wednesday had approved raising the company’s stake in Airtel Africa by 16.3% to about 79% through a share swap agreement worth Rs 28,220 crore from the 62.7% stake at present.

“The UK regulations allow you to go up to 90%. With this move, we have gone up to 78%. Ambition for Airtel should be whatever is allowed to go up to 90%, they should get there,” Mittal said.
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