India's Airtel's Stock Drops as SingTel Raises Stake in Promoter Bharti Telecom

The stock price of India's leading mobile carrier Bharti Airtel has dropped, reversing sharp gains a day after Singapore Telecommunications announced it would increase its equity stake in Bharti Telecom, a promoter company of Bharti Airtel.

Bharti Airtel's stock price gained 1.7% in early trade Friday in Mumbai. The stock finished 3.31% lower to 331.35 rupees (£3.4, €4), putting the value of the company at 1.32 trillion rupees (£13.7bn, €16bn, $21.3bn).

The benchmark S&P BSE Index finished 3.97% lower in Mumbai, pulled down by a weak rupee which dropped to a historic low against the US dollar in late afternoon trade on Friday. The rupee, which has been in freefall since April, fell to 62.03 to the US dollar.

SingTel, Southeast Asia's largest telecoms firm said on Thursday it would increase its stake in Bharti from 30.76% to 32.34%. The S$383.6m (£193m, €226m, $302m) all-cash deal is expected to be completed on 28 August, according to a SingTel statement.

Singapore's biggest company by market capitalisation said the purchase "is in line with (its) strategic focus on maximizing the value of its existing businesses, which includes reviewing opportunities to increase shareholdings in existing associates. "

Bharti Telecom holds approximately 43.57% of Bharti Airtel.

Bharti Airtel's pretax earnings contribution to SingTel jumped 20% to S$113m ($88.9m) in the April-to-June first quarter, the Singapore-based firm said on Wednesday.

Apart from Bharti Airtel, SingTel holds significant stakes in four other foreign mobile operators: Indonesia's Telekomunikasi Selular, Thailand's Advanced Info Service, the Philippines' Globe Telecom and Pacific Bangladesh Telecom. As a result, SingTel has 477 million customers across 25 countries in Asia, Australia and Africa.

The UK's Vodafone too holds a stake in Bharti Airtel, which it could be forced to sell after India revised telecom licensing rules earlier this month.

The world's second-largest mobile operator, Vodafone has a 4.4% stake in Bharti, worth about $1bn.

According to new rules published by India's telecoms ministry, a mobile carrier cannot own a direct or indirect equity stake in a rival firm operating in the same service area. Vodafone's Indian subsidiary and Bharti compete in all of India's 22 service areas, referred to as telecom circles.