Singtel has agreed to sell a 3.3 per cent direct stake in its regional associate Bharti Airtel for $2.25 billion to help fully fund its 5G and expansion plans.

In a statement yesterday, the telco said it expects to net a gain of $600 million from the sale of the stake to Bharti Telecom, its joint venture with India's Bharti Enterprises.

This will leave Singtel with a 29.7 per cent effective stake in Airtel comprising a 19.2 per cent indirect stake through Bharti Telecom, and a 10.5 per cent direct stake.

"As long-term strategic investors and partners, the value of our stakes in our regional associates has risen substantially over the years but has not been properly reflected in our share price. This sale in Airtel will be our first ever and seeks to address this gap by illuminating the sizeable value of our holdings in Airtel," said Mr Arthur Lang, group chief financial officer of Singtel.

Proceeds from the sale will help Singtel fully meet its needs for 5G and growth initiatives in the years to come, Mr Lang said.

It will also put the group in a "strong position to grow its dividends in a sustainable way in line with its dividend policy", he added.

Following the transaction, Singtel also plans to increase its stake in Intouch Holdings, the parent company of its Thai regional associate AIS, as well as partially divest Airtel Africa as part of its recent capital management initiatives to rebalance and optimise Singtel's associates portfolio.

Singtel has been streamlining its portfolio as it focuses on 5G operations and seeks new growth engines. It is disposing of advertising platform Amobee and is said to be weighing options, including selling its cyber-security business Trustwave Holdings and a possible stake sale in some fibre assets.

Singtel is not the only operator divesting assets. Vodafone Group is divesting bits of its businesses and Japan's NTT is said to be mulling over a sale of its controlling stake in an information technology services firm.

News of the divestment comes a day after Singtel reported a 41.3 per cent rise in first-quarter net profit to $628 million, which was mainly attributed to better operational performance and exceptional gains from Airtel.

Singtel shares rose five cents, or 1.9 per cent, to $2.67 at close yesterday, after its divestment news.

THE BUSINESS TIMES, BLOOMBERG