Idea stocks dip post-merger announcement

At closing, the scrip of the telecom major was down by 9.55 per cent to Rs 97.60 per share at the BSE, emerging as the worst loser of the day. Overall, the S&P BSE telecom index, which opened at 1,268.30 points, closed at 1,251.19 – down 13.99 points or 1.11 per cent. 

Bharti Airtel remained a gainer, with its shares up 0.79 per cent to Rs 349.45 per scrip at the BSE. On the other hand, Reliance Communications was down by 0.26 per cent to Rs 38.15 per share. In one of the biggest mergers in telecom, Vodafone India and Aditya Birla Group-promoted Idea Cellular announced the much-awaited amalgamation, following which Vodafone will hold 45.1 pc in the combined company. 

“The market did not take the news (of Idea Cellular merger with Vodafone India) well with Idea shares losing 10 per cent in value and closing the day at Rs 97.60. Analysts were unhappy with the structure of the deal as the joint entity will continue to have high debt levels,” Vijay Singhania, Founder and Director of brokerage firm Trade Smart Online, said. 

“The merger is not witnessing any cash inflows from either companies. Besides, the deal price is around the current price of joint entity as reported in the exchange disclosure. This leaves little room for appreciation,” Singhania noted.