Sensex closes 114 points down; Bharti plunges over 9 per cent

The benchmark Nifty gave up some of Thursday's gains on the back of profit booking in oil & gas, power, telecom, cement, select banking, auto, and metal stocks. Index heavyweight Bharti was the top loser, down over 9% post it offer of USD 10.7 billion for Zain Telecom's African assets.

The board of Kuwait's mobile telecom firm Zain has accepted Bharti Airtel's USD 10.7 billion offer to sell its African assets, excluding Sudan and Morocco. Both firms have agreed to enter into exclusive discussions till March 25. The deal would give Bharti a foothold in a largely untapped African region with significant growth potential.

The stock saw huge selling pressure becuase Zain's African business is loss making at the profit after tax level. Africa represents about 62% of Zain's 64.7 million customers, but only 15% of the group's net profit. The deal at USD 255 per subscriber seems expensive. There is also no clarity on how much debt there is on Zain's books. It had placed its African assets on the block for the past seven months.

"It's going to be a big challenge for Bharti to make money out of Zain's African assets. Some may think it's not a value acquisition. But the key factor is there are not enough sellers available in the global telecoms market," Rishi Sahai, Director at Cogence Advisors, an M&A advisory firm told Reuters. Brokerage firm Macquarie too feels the deal looks expensive on first look. "It has earnings before interest, taxes, depreciation and amortization margin of 31.4%. The business is also significantly inferior to MTN."

However, buying in technology, select capital goods and pharma stocks along with JSPL, Tata Steel, ITC, Hero Honda and HDFC Bank capped the losses to major extent.

The 30-share BSE Sensex closed at 16,038.35, down 114.24 points or 0.71% and the 50-share NSE Nifty fell 0.52% or 24.90 points to 4,801.95. However, on the global front, European markets were trading 1% higher, at the time of closing of Indian equities. Most Asian markets barring Nikkei were shut today; Nikkei fell 0.8%.