Lang, SingTel on cost optimization and reducing leverage at BTL level

At the H1FY25 earnings call, Arthur Lang, Group CFO, Singtel responded to a question asked by Piyush Choudhary, HSBC.

Piyush Choudhary – HSBC
Two questions, firstly on cost optimization. Can you update us on your $200 million cost optimization, how much has been achieved in the first half so far?

Secondly, On the BTL losses, that is rising, and it will further increase as there is more loans being taken to buy stake from ICIL. How are we thinking about any initiatives to reduce interest costs or reduce the leverage at the BTL level?

Arthur Lang – Group CFO
Just to recap. BTL owns about 40% of Airtel, the listed entity. We sold about 3% plus in Airtel. So, we’re moving some of our stakes to BTL and the financing of that has been primarily funded out of debt. With the expanded debt amount, there will be interest servicing this year. The only way that BTL can service the interest of the debt is for Airtel to pay a higher dividend. That is the first point.

The second point is if you look at our direct stake in Airtel, we own about 9% plus direct stake in Airtel, After the sale, Sunil Mittal owns slightly below 3%. Both of us will look to equalize our direct stakes over time. We are in no hurry in equalizing that stake, but we are looking to do that in the medium term and that is definitely part of our whole ST28 dividend story.

Third point is longer term. What do we do with the debt, right? There are various ways of paying down that debt. It could be, of course, one extreme, which I’m not suggesting, is both shareholders put more equity in to pay down the debt. That’s one theoretical, and I stress, theoretical, scenario, but there could be another scenario where BTL sells shares in Airtel to fund that.

But again, at this point in time, we have no intention to do that. It’s really the servicing of the debt that is something that we need to think about and, as I mentioned earlier, the servicing of the debt will need to come from Airtel dividends.

CT Bureau