Bharti Infratel's debut on bourses starts with sad chapter

Leading telecom company Bharti Airtel's tower arm Bharti Infratel's shares plunged 13 per cent in its trading debut after raising about Rs 4,180 crore in the biggest initial public offering (IPO) in two years.

After falling over 14 per cent during the day, the stock finally ended at Rs 191.20 down 13 per cent from its issue price of Rs 220 per share on the Bombay Stock Exchange. At the National Stock Exchange, it settled 13.18 per cent lower at Rs 191.

Industry sources said that Bharti Infratel's poor debut is unlikely to deter future offerings.

"It is early. The stock should settle in the next day or two. If foreign inflow continues, the market will remain buoyant, which should translate into more deals," a person familiar with the Bharti Infratel IPO said. An industry official said, "If not IPOs, there should be more follow-on offerings." "The business of towers is under stress," said K.K. Mital, portfolio manager, Globe Capital. "This is a business with a long gestation period and not retail, something which HNIs (high net worth investors) easily understand," he added.

Shares of GTL Infrastructure Ltd, the only other listed mobile tower operator, have slumped 90 per cent in the last two years hit by debt repayment worries. Bharti Airtel, which owned 86 per cent of the tower operator before the IPO, has about 34,000 towers and owns 42 per cent of Indus Towers, the world's largest tower operator. Along with Indus, Bharti Infratel has a 38-per cent share in the tower market. The company had said it plans to use the proceeds from the IPO to fund its expansion and future acquisitions.

Bharti Infratel's listing pushed the IPO volume to Rs 7,400 crore this year from Rs 7,480 crore in 2011. In 2007, corporates raised Rs 47,575 crore through IPOs. The IPO of the Sunil Bharti Mittal led-company was subscribed 1.3 times.

IPO volumes are expected to improve further on rising foreign capital inflow. Several high-profile deals, including the potential IPO of Vodafone, are likely to hit early next year, according to bankers.

Courtesy: Mail Today