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Bharti Airtel Shares Jump On Tata Teleservices Deal

The "debt-free (and) cash-free" deal with Tata Teleservices will boost Bharti Airtel's subscriber base by over 40 million, and increase its airwaves in India.
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The deal with Tata Teleservices is earnings accretive for Bharti Airtel, say analysts.
The deal with Tata Teleservices is earnings accretive for Bharti Airtel, say analysts.

Mumbai: Bharti Airtel Ltd saw its share price surge as much as 8 percent in early Friday trade as investors cheered its purchase of Tata Group's mobile arm, in a deal that secures 40 million new clients and spectrum at little cost.

The deal with Tata Teleservices Ltd "is a sweet one for Bharti," domestic brokerage Kotak said in research note, raising its recommendation on Bharti stock to "add" from "reduce."

Bharti shares were up 7.08 percent at 12.35 pm, outpacing the broader NSE index's 0.63 percent. Shares of Tata Teleservices (Maharashtra) Ltd, a Tata Teleservices unit, were up 9.1 percent.



The deal outlined on Thursday, dubbed "debt-free (and) cash-free", spares Tata Group the trouble of any potentially drastic restructuring of the money-losing operation.

For Bharti - India's biggest telecommunications network operator - the deal could protect its lead, Bank of America Merrill Lynch said in a research note.

India's telecoms market has seen rapid consolidation since the entrance of Reliance Jio Infocomm Ltd sparked a price war.

The Indian unit of Britain's Vodafone Group PLC and Idea Cellular Ltd, the country's second and third biggest telecoms firms respectively, have won antitrust approval to merge. In addition, Bharti has agreed to buy the local unit of Norway's Telenor ASA.

Credit Suisse in a research note said Bharti's latest deal boosts its market position in the face of a Vodafone-Idea combination, and keeps the two roughly equal in terms of spectrum and revenue.

© Thomson Reuters 2017



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