Bharti Airtel Ltd. surged to a six-year high in Mumbai trading after the Indian phone carrier and Orange SA said they were in exclusive talks for the acquisition of four of Bharti’s African businesses.
The shares climbed 3.7 percent to 445.25 rupees, the highest closing price since May 2009. Bharti has climbed 26 percent in 2015, outperforming the S&P BSE Sensex index’s 2.5 percent advance.
Paris-based Orange is discussing the possible acquisition of Bharti’s units in Burkina Faso, Chad, Republic of Congo and Sierra Leone, as the French phone company considers expansion in one of its fastest-growing markets. For Bharti, a disposal would raise funds as India’s largest mobile-phone operator invests amid heavy domestic competition.
The transaction value could be $680 million to $1.4 billion, according to a Bank of America Merrill Lynch note.
A successful exit out of the African market may lead to a re-rating of Bharti’s stock, as the company’s net debt position would improve, wrote Sachin Salgaonkar and Karan Parmanandka, Mumbai-based analysts at Bank of America Merrill Lynch.
The Indian company sold phone-tower operating businesses in five African countries for more than $1.3 billion earlier this month, helping it reduce debt and cut costs. Orange already operates in 19 countries in Africa, which account for 11 percent of its sales.