Singtel is selling a lot of its assets, including stake in Airtel

29 Aug 2022 , 09:36 AM

Singtel stated last week that it would sell a 3.3% share in India’s Bharti Airtel Ltd. (NSE-1.18%) to Bharti Telecom Ltd. for an overall consideration of around USD 1.61 billion, one day after disclosing its first quarter 2022 financial results.

The largest telecom company in Southeast Asia based on market capitalization stated that the sale’s revenues may be used to pay down debt, fund 5G capital expenditures, and support expansion efforts.

This appears odd given that Airtel’s financial success was one of the two key factors contributing to a profit increase of over 41% for the fiscal quarter that ended in June. The pre-tax amount that Airtel NSE-1.18% contributed to Singtel’s profits increased by 145.6%, from SGD 64 million (USD 46 million) to SGD 156 million (USD 112 million). Only this regional associate had an increase in earnings from the same time last year.

However, a close examination of the notes in Singtel’s Q1 business report submitted to the Singapore Exchange reveals that Airtel’s success is the result of unusual benefits from one-time items. This includes the recognition of a deferred tax credit in Africa and a fair value gain on the revaluation of its foreign currency convertible bonds.

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