Bharti shares slide following Zain Africa bid

Following Bharti Airtel’s bid for Zain’s African assets for US$10.7 billion, the Indian operator’s shares closed 9.2 per cent lower yesterday at INR 285. The single day of share trading on the Bombay Stock Exchange since Sunday’s announcement left the company’s investors poorer by INR 110 billion (US$2.38 million). Bharti’s market capitalisation now stands at INR 1.1 trillion.

The view from analysts over Bharti’s intentions to buy telecoms operations in 15 African countries is varied with Merrill Lynch, Macquaire and domestic securities house Emkay saying the proposed acquisition is highly priced. However, Goldman Sachs, UBS and Deutsche Bank perceive the acquisition as being long-term positive for the telco.

In a research note from the Bank of America-Merrill Lynch, the foreign broking house reduced the stock’s rating from ‘buy’ to ‘underperform’. It cited three reasons: the deal valuation appeared rich, the growth outlook for Zain’s African portfolio appears unexciting and that a potential deal could materially stress Bharti’s balance sheet.

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Zain sells African assets for US$10.7 billion