Bharti Infratel gains 7% after it completes merger with Indus Towers

Apart from double taxation benefits on dividend pass through, there would not be major benefit for Bharti Infratel as a combined entity, say analysts at ICICI Securities

Shares of Bharti Infratel moved higher by 7 per cent to Rs 200 on the BSE on Friday after the company completed merger with Indus Towers to create a mega tower company (renamed Indus Towers).

Bharti Airtel's stake in the combined entity will be 36.73 per cent while Vodafone group and Providence will hold 28.12 per cent and 3.25 per cent, respectively. Vodafone Idea (VIL) has received Rs 3,760.1 crore cash for its 11.15 per cent holding in Indus.

"The Board has allotted 757.8 million equity shares of Rs 10 each to the Vodafone group and 87.51 million equity shares of Rs 10 each to PS Asia Holding Investments (Mauritius) Limited (Providence) aggregating to 28.12 per cent and 3.25 per cent, respectively in the post-issue share capital of the company," Bharti Infratel said in the filing. READ HERE

Analysts at ICICI Securities noted that Vodafone Idea (VIL) has agreed to make a pre-payment of Rs 2,400 crore to the merged tower entity from the cash consideration to be received from Infratel at the time of closing. "Apart from double taxation benefits on dividend pass through, there would not be major benefit for Bharti Infratel as a combined entity. The promoters Airtel & Vodafone (UK) Group, however, in our view, would look to pare their stake to PE players later," they said in a report.

Given the weak financial health of telcos, analysts at Emkay Global Financial Services anticipate receivables to stay at elevated levels. However, the pre-payment of Rs 2,400 crore by VIL (including monthly payments and receivables), as per the merger terms, provides comfort, the brokerage firm said in September results update.

At 10:25 am, Bharti Infratel was trading 6 per cent higher at Rs 197 on the BSE as compared to a 0.33 per cent-rise in the S&P BSE Sensex. A combined 9.8 million equity shares had changed hands on the counter on the NSE and BSE till the time of writing of this report.