Airtel hits 52-week high, m-cap surpasses ICICI Bank; here's why

Shares of Bharti Airtel surged as much as 5.3% on Thursday, to hit a 52-week high of ₹1, 281.40 apiece on the BSE, after the company signed a definitive agreement with Dialog and Axiata Group to merge operations in Sri Lanka.

As per the regulatory filing, Dialog will acquire 100% of the issued shares in Airtel Lanka, in consideration of which Dialog will issue to Bharti Airtel. These ordinary voting shares will amount to 10.355% of the total issued shares of Dialog by way of a share swap. The telecom major says that the consolidation will enable the merged entity to garner economies of scale and reduce duplication of infrastructure, achieve synergies in technology and capital expenditure leading to enhanced high-speed broadband connectivity, voice and value-added services, cost savings and operational efficiencies.

“The transaction is subject to the approval of Dialog's shareholders and is pending the completion of specific conditions outlined in the Share Sale Agreement, including clearance from the Colombo Stock Exchange (CSE) and compleƟon of other applicable legal, corporate and regulatory compliance procedures,” says the telecom major.

At 2:24 pm, the share price of the telco was trading 4.96% higher at ₹1,277. In contrast to this, the broader BSE Sensex was trading almost flat at 72,930.41. The company’s market capitalisation, surpassed that of ICICI Bank, at ₹7,23,657 crore, with more than 3.04 lakh shares exchanging hands on the BSE, as against the two-week average of 1.03 lakh shares. The share price of the telecom major hit a 52-week low of ₹752.70 on April 18 last year.

In the past one month, three months and one year, the counter has risen 4.22%, 17.48% and 68.20%, respectively. In the year-to-date period, the counter has risen 26.03%.

“The merger between Dialog and Airtel Lanka is aligned to Axiata’s strategy of market consolidation and resilience. The merger will create value for Shareholders of Dialog Axiata PLC and of Axiata Group through achievable synergies. We have the utmost respect for Airtel Lanka and its employees and look forward to working together as we integrate the two companies,” says Vivek Sood, Group CEO and MD, Axiata Group Berhad.

The company is yet to announce its FY24 March quarter results. In the October to December quarter of FY23, the company reported 53.8% year-on-year increase in its consolidated net profit to ₹2,442 crore primarily due to sustained momentum in its India business. The revenue from operations of the telecom major witnessed a growth of 5.9% YoY to ₹37,900 crore. Airtel's EBITDA during the quarter stood at ₹20,044 crore, up 7.8% YoY, while the EBITDA margin at 52.9% saw an expansion of 94 bps YoY. Airtel's EBITDA margin improved on the back of “operating leverage and cost efficiencies" arising from its efforts on the waste programme.