BackAirtel gets DoT nod to raise FDI limit to 100%
The move would enable Bharti Airtel to raise more funds from foreign investors at a time when it faces a heated tariff war with Reliance JioThe move will allow Singtel, which owns a 35% stake in Bharti Airtel, to increase its stake in the Indian telco
PremiumNEW DELHI : Bharti Airtel Ltd has received approval from the telecom department to increase foreign direct investment in the company to 100%, allowing the telecom operator to raise more capital if it so requires.
The Reserve Bank of India has already permitted overseas portfolio investors to invest as much as 74% in Bharti Airtel, the company said in a statement on Tuesday.
The Indian government’s approval will allow Singapore Telecommunications Ltd or Singtel, which owns a 35% stake in Bharti Airtel, to increase its stake in the Indian company.
It would also permit the Indian telecom operator to raise more funds from other foreign investors.
“This is a very positive move for Bharti Airtel as it opens up more avenues for the company to raise resources. Singtel is already a significant shareholder. Given that Airtel has increased mobile tariffs last month, it becomes even more attractive for Singtel to raise its shareholding and even for other investors to buy stake in the company," said a Mumbai- based analyst requesting anonymity.
Bharti Airtel may need to raise more funds as the department of telecommunications (DoT) prepares to hold the first spectrum auction for 5G airwaves by April.
DoT plans to put 8,300 megahertz of spectrum at a reserve price of ₹5.23 trillion under the hammer. Of the 8,300MHz, 6,050MHz are allocated for 5G services. India has already initiated the process to hold 5G trials.
Currently, 100% FDI is allowed in telecom, of which up to 49% investment in a company can be done through the automatic route.
The inflow of overseas investment beyond that requires approval from the government.
Bharti Telecom is the single-largest shareholder in Bharti Airtel with about a 41% stake. Singtel owns 48% in Bharti Telecom, which gives it a 35% stake in Bharti Airtel.
All telecom operators, including Bharti Airtel, had in December raised mobile tariffs by as much as 40%. Earlier this month, Bharti Airtel also raised the monthly minimum recharge tariff for users to ₹45, a year after it set the price at ₹35.
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