Bharti Infratel up 28% in 3 days on completion of Indus Tower merger deal

Shares of Bharti Infratel surged 9 per cent to Rs 238 on the BSE on Tuesday, rallying 28 per cent in the past three trading days after the company completed merger with Indus Towers to create a mega tower company (renamed Indus Towers). The stock hit a 52-week high of Rs 295.75 in December 2019.

According to a regulatory filing, the merger of Bharti Infratel and Indus Towers to create a mega tower company has been completed, and Vodafone Idea has received about Rs 3,760 crore cash for its 11.15 per cent holding in Indus.

As promoters of the new company, Vodafone Group will hold 28.12 per cent stake in the merged entity while the holding of Bharti Airtel Group will be about 36.7 per cent.

"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 on Thursday, November 19.

Analysts at ICICI Securities see near-term stock supply only from Providence PE, which may monetise its stake as it had earlier opted for part cash-out. Bharti Airtel and Vodafone Plc had earlier shown interest in selling their stakes; however, considering their large holdings, we don’t anticipate them to sell in the open market creating supply glut. It could be a structured deal such as forming InvIT (though BHIN management has earlier denied it, but the situation has since evolved), or bringing in a strategic investor.

We see reduction in stake by Bharti Airtel and Vodafone Plc would make the merged entity more independent, which may drive some rerating in the valuations with reduction in conflict of interest (customer and owner are same as of now), the brokerage firm said in company update.

At 10:06 am, Bharti Infratel was trading 6 per cent higher at Rs 232 on the BSE, as compared to 0.82 per cent rise in the S&P BSE Sensex. A combined around 15 million shares had changed hands on the counter on the NSE and BSE.