Sale of Bharti Telecom’s stake in Airtel is more of an exercise in debt relief, analysts say – Reuters


NEW DELHI: Development company Bharti Telecom Ltd’s (BTL) secondary sale of shares in Airtel is more of a deleveraging exercise and sector fundamentals remain attractive, Credit Suisse said in a final note.

Bharti Telecom is raising $1 billion (nearly Rs 7,600 crore) by selling shares of telecommunications company Bharti Airtel through a block deal on Tuesday at Rs 558 apiece, to become debt free. Bharti Telecom plans to dilute 2.75% of its stake through the secondary placement.

“We consider this sale of stake by BTL to be positive as it will make the promoter entity debt-free, thus improving flexibility for any support to Airtel in the future. The promoter group will continue to own 56.3% of Airtel”, IIFL Securities mentioned.

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“The secondary equity sale by Bharti Telecom is more of a deleveraging exercise, in our view; sector fundamentals remain attractive,” Credit Suisse said. Credit Suisse added that it expects Bharti Airtel to benefit from the ongoing market repair in the sector.

Another Jefferies report stated that while a stake sale by promoters is generally interpreted negatively by investors, in this case the stake sale is primarily aimed at deleveraging Bharti Telecom and, therefore, is not negative to its notice.

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