Bharti Infratel slumps 8% as likely Idea-Vodafone merger post risks to topline

NEW DELHI: Shares of Bharti Infratel continued to tumble for the second session in trade on Tuesday after telecom giant Vodafone acknowledged that it was in talks with third largest telecom operator Idea Cellular for a possible merger. The merger deal ,if materialises, could dent Bharti Infratel’s revenue, whose towers are used by both Idea Cellular and Vodafone.

Bharti Infratel may risk losing nearly 5.9 per cent revenue, assuming 15 per cent of the sites are rationalised by the combined entity, Edelweiss Securities said in a note.

The stock tanked 8.7 per cent to hit a low of Rs 300.10 on BSE. This is in addition to 7.07 per cent fall in the preceding session.

JM Financial said that the potential telco-industry consolidation poses risk to Bharti tenancies. “For instance, downside from a potential Vodafone-Idea merger could be around Rs 60 per share," the brokerage said.

CLSA in a recent note said that site rationalisation by such a merged entity could lead to a loss of 14,000 tenancies for Indus Towers and 4,000 tenancies for Bharti Infratel.

“The consequent impact of these losses on Bharti Infratel’s FY18CL consolidated revenues and Ebitda estimates would be about 3% and around 7% respectively,” the foreign brokerage said.