Mumbai, Oct 1 (Inditop.com) Bharti Airtel shares, which opened on a firm note Thursday, ended 4 percent higher than its previous close, a day after the firm had to terminate the proposed $24-billion equity-swap-cum strategic tie-up with South Africa’s telecom major MTN.
The deal, if it had materialised, would have created the world’s third largest mobile phone firm, but had led to analysts worrying that the consequent debt burden would have made its stock unattractive.
Upon collapse of the talks, the company’s shares opened at Rs.435 Thursday on the Bombay Stock Exchange (BSE) as against the previous day’s close at Rs.418.55.
It shut shop at Rs.435.35, a gain of Rs.16.80 or 4.01 percent over the previous day’s close.
The scrip had shot up to an intra-day high of Rs.467, moving up Rs.27.30 or 6.52 percent. It had hit a 52-week high of Rs.990 May 19 and an annual low of Rs.360.10 Aug 11.
The company has been a laggard on the stock exchanges over the past month, falling 3.74 percent on the BSE even as the benchmark index of the bourse, the Sensex, rose 7.56 percent during the same period. Analysts had been viewing the stock negatively owing to Bharti’s persistent sweetening of its offer for MTN.
In the last quarter, the scrip fell 4.36 percent, while the Sensex rose 18.17 percent.
However, with the deal off, the scrip is back in favour with traders and is expected to take off.
“In a way this is good news for the Bharti scrip; had this deal happened it would have burdened the company’s balance sheet which is currently low on leverage,” said SMC Capitals equity head Jagannadham Thunuguntla.
“Analysts have been wary of the deal because of past acquistions like the Tata Corus deal, which turned Tata’s balance sheet into a heavily leveraged one,” added Thunuguntla.
Late Wednesday, Bharti Airtel and South Africa’s MTN said they were terminating their talks for the proposed deal that could have created a large mobile phone entity, just behind China Mobile and Vodafone Group, with a subscription base of 207 million.
According to Bharti, the proposed deal – which even had the backing of Prime Minister Manmohan Singh – was called off after the South African authorities declined to accept certain regulatory constraints on the part of both sides.
“This structure needed an approval from the government of South Africa that has expressed its inability to accept it in the current form,” said a statement by Bharti Airtel.
“In view of this, both companies have taken the decision to disengage from discussion,” said the statement issued after the closing of stock markets in both India and South Africa.
“The alliance planned between Bharti and MTN was a vision based on solid fundamentals, which had the potential of creating an emerging markets telecom giant and the third largest telecom company in the world.”
