Bharti's decision to buy Telenor India sends stock soaring 10%

Shares of Bharti Airtel rose over 10 percent intraday Thursday after the company announced that it is acquiring Telenor India.The company entered into a definitive agreement with Telenor South Asia Investments to acquire Telenor (India) Communications, subject to approvals from the regulator, it told the exchanges on Thursday. The cost of this acquisition is still under finalisation. Sources tell CNBC-TV18 that the deal’s value could be pegged roughly at Rs 6,800-7,000 crore, which includes Telenor India’s debt of Rs 1,500 crore. As part of the deal, Airtel will buy Telenor India's running operations in seven circles—Andhra Pradesh, Bihar, Maharashtra, Gujarat, UP (East), UP (West) and Assam. These circles, Airtel says, represents a high population concentration and a high potential for growth. The firm will also get additional 43.4 MHz spectrum in 1800-MHz band from Telenor India. "The acquisition of additional spectrum through this transaction has further enhanced our already solid spectrum portfolio. The proposed transaction will also create substantial long term value for our shareholders given the significant synergies," said Gopal Vittal, Managing Director and CEO (India and South Asia), Bharti Airtel, in a statement.Meanwhile, the telecom major on Wednesday announced strategic stake purchase through its subsidiary Bharti Airtel Services in fintech startup Seynse Technologies, which runs a digital lending platform. The stock has seen strong movements, posting a rise of over 18 percent in the past one year. At 09:20 hrs Bharti Airtel was quoting at Rs 390.55, up Rs 29.40, or 8.14 percent on the BSE. It touched a 52-week high of Rs 390.55.Analysing the deal, Deutsche Bank feels that the key value for Bharti from this deal would be from two high-population arkets of Uttar Pradesh (East) and Uttar Pradesh (West). Telenor holds 7 MHz spectrum in these markets comparted to the minimal holding of Bharti. So, this acquisition, it feels, will help Bharti roll out 4G in 1800 MHz band in these two markets. On revenue share, the brokerage states that Telenor India has 4-10 percent share in six of the operating markets. Hence, this acquisition will help Bharti significantly strengthen its market position in all markets. However, in Bihar, the merger could lead to an estimated revenue share of 53-54 percent for Bharti, which is above the cap of 50 percent. It pegs the volume of Telenor India’s spectrum around Rs 4,000 crore.