Summary
MTN and Bharti acquisition will give SingTel indirect entry into the African Market - that is supposed to be next growth story after Asia. Now the only question is dilution of their stake down from current 30%, now that is a matter of negotiation.
Analysis
The Pan Asian Mobile strategy of SingTel is certainly long term and calls for stake in mobile operators across Asia - in most cases brownfield to an extent of 100% is possible.
SingTel already owns stake in more than half a dozen mobile operators across Asia - now how much is the management bandwidth to run their operations on day to day basis given that Company own them 100%. Running aka Vodafone 2 (beside Vodafone there very few mobile operators who own significant stake in more than half a dozen mobile cos. even if there are most of them go for minority stake and later exit as opportune to make profit).
Even SingTel has settled for minority stake in some of the mobile operators.
In case company owns less than 50% in such case how much management clout company has in them is matter of debate (though company certainly reap financial benefits out of them).
In case of Bharti, the MTN deal will give them indirect entry into African market where they share the risk with Bharti, MTN and other financial partners.
For dilution of stake, in case of combined entity if the valuation and dividend payout is better, i thing SingTel being a long term investor can wait. But as stake falls below 26% it may kick in certain clauses of corporate governance / shareholder agreement which I think SingTel management may like to discuss with Bharti to safeguard its interest.
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
