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India shares ease; Bharti Airtel falls on MTN talks

Tue May 6, 2008 11:09am IST
 
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MUMBAI (Reuters) - Indian shares fell slightly on Tuesday, with top mobile operator Bharti Airtel dropping almost 5 percent after confirming it was in exploratory talks for a stake in South African telecoms operator MTN Group.

Shares in Bharti Airtel fell as much as 4.9 percent to 850 rupees, their lowest since April 25, on investor fears of how such a large acquisition would affect its balance sheet.

Bharti and MTN said in separate statements they were in exploratory discussions with each other.

The Financial Times, quoting unnamed insiders, said Bharti had tabled a bid for 51 percent of MTN that valued the firm at around $37 billion.

"The market is just being reactionary as it feels that there will be a big cost impact on the company for the initial years of the acquisition," said Deven Choksey, managing director at K.R. Choksey, a local brokerage.

"The market is always worried about the financial impact in such transactions, and it behaved in the same manner when the Tata Group bought Jaguar and Land Rover and Corus," he said.

At 10:20 a.m. or 0450 GMT, the benchmark BSE 30-share index

was down 0.16 percent, or 27.78 points, at 17,463.12, with 15 components in the red.

The index is about 14 percent down so far in 2008, although it climbed 10.5 percent in April, its first monthly gain in 2008.  Continued...

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