Bharti Airtel surges 15% in two days on stake sale plan in Bharti Infratel

The stock was up 6% at Rs 354 on the BSE in intra-day trade on Tuesday, gaining 15% in the last two trading days.

Shares of Bharti Airtel were trading higher for the second straight day, up 6 per cent at Rs 354 on the BSE on Tuesday. The stock of telecom services provider has surged 15 per cent in past two trading sessions, after the company said it will shed its stake in the Bharti Infratel from 50.33 per cent to 18.33 per cent.

Nettle Infrastructure Investments, a wholly-owned subsidiary of Bharti Airtel, will buy a 32 per cent stake or 591.87 million equity shares in the telecom tower company.

The proposed date for acquisition will be on or after March 18, 2019. The rationale for the proposed transfer is evaluation of monetisation opportunities in future, Bharti Infratel said in a regulatory filing.

Nettle Infrastructure Investments has confirmed that the acquisition price would not be higher by more than 25 per cent of the price of Rs 289.96 per share.

At the current stock price of Bharti Infratel at Rs 318, Airtel will receive around Rs 18,800 crore from the stake sale.

Meanwhile, BSE said the Exchange has sought clarification from Bharti Airtel on March 12, 2019, on report that the company to sell stake in Bharti Infratel. The reply is awaited.

Bharti Airtel on Thursday, March 7, said GIC, formerly known as Government of Singapore Investment Corporation, has committed to subscribing to the company’s rights issue of Rs 25,000 crore. This is expected to reduce its leverage and strengthen the balance sheet amid fierce competition.

The promoter group of Bharti Airtel, including the Bharti group and Singtel, would subscribe to Rs 11,786 crore in the rights issue, one of the largest such exercise by an Indian company, while GIC will subscribe to Rs 5,000 crore by way of renouncement in their favour.

The Promoter and Promoter Group also reserves the right to subscribe either itself or through investors for additional shares in the Issue, including in the event of under subscription by public, in accordance with the applicable laws, the company said.

According to analysts at JM Financial Institutional Securities, Airtel share price is likely to drift lower in the near-term, as rights issue price of Rs 220 is at a hefty discount to current market price, and large size of the issue would result in a 22 per cent dilution in total equity base (post rights issue).

Nonetheless, this fund-raise would significantly repair Bharti’s balance sheet, and in conjunction with other deleveraging efforts may provide additional financial flexibility. Our estimates and target price are under review. We maintain our long-term Buy rating on Bharti Airtel, the brokerage firm said in a report dated February 28, 2019.

At 01:02 pm, Bharti Airtel was up 5 per cent at Rs 349 on the BSE, as compared to 1 per cent rise in the S&P BSE Sensex. The trading volumes on the counter more than doubled with a combined 19.28 million equity shares changed hands on the BSE and NSE so far.

Bharti Infratel was trading 1 per cent lower at Rs 317, after falling 3 per cent to Rs 309 on the BSE in intra-day trade today.