Brokers' take

Singtel | Buy (maintained) March 11 close: S$2.93 Fair value: S$3.79 OCBC Investment Research, March 11

Following Bharti Airtel's upcoming US$3.5 billion rights issuance, Singtel has announced that it will be subscribing fully to its rights entitlement for its direct stake of 15 per cent in Airtel. Bharti Telecom (BTL), one of Airtel's major shareholders, will participate in its take-up entitlement, except for around US$700 million of it, which will be renounced to GIC. As a result, Singtel's effective stake in Airtel will drop from 39.5 per cent to 35.2 per cent, assuming full subscription on the public tranche.

Management remains cautiously optimistic of Airtel's prospects in India, given the significant consolidation, as well as Airtel's 4 per cent quarter-on-quarter growth in mobile average revenue per user (ARPU) after 9 consecutive quarters of decline.