A day after the board of Kuwait?s Zain Telecom agreed to sell its African unit, Zain Africa BV to Bharti Airtel for $10.7 billion, investor excitement was missing with Bharti Airtel?s share on BSE inching up by just 2% to close at Rs 313. Analysts said the stock movement was on expected lines and is not expected to surge, as uncertainty over the scheme of things continue.
While the company was ringing its optimism on the deal the investors had pointed out on the risks involved, which can burden Bharti?s balance sheet. Since the news of Bharti?s intention to buy Zain was made known to the market, the stocks have been under performing, signaling the concerns of the investor community. On February 15, 2010, when the firm announced the intention to sign a deal with Zain, the stock had declined by almost 9%.
Nishna Biyani, telecom analyst with Prabhudas Lilladher, said: ?We expect the stock to have a neutral impact on the deal due to the continued uncertainty and risks involved in the deal. We expect it to be in the Rs 290-340 levels.? Another analyst with a research firm said, ?We do not expect the stock to show improvement as Bharti has still not been able to show a clear road map on how and by when it will break even the expected investment in the deal and capex in Africa.? Nick Jotischky, principal analyst, Informa Telecoms & Media said: ?Bharti will not just be competing with other mobile operators but with other brands in adjacent consumer goods sectors. This means that Bharti will be under pressure to offer services that are directly relevant to end-users and this will differ from market to market.?