HOME > BUSINESS > Tata Tele acquisition good for Bharti Airtel – Fitch

Tata Tele acquisition good for Bharti Airtel – Fitch

Bharti Airtel Limited’s (BBB-/Stable) announcement that it plans to acquire the consumer mobile operations of Tata Teleservices and Tata Teleservices (Maharashtra) Ltd (Tata Telecom business) is positive for the deal participants as well as the industry, Fitch Ratings said.

Bharti’s credit profile will improve slightly as it is paying no consideration for the operations, which it would acquire free of debt.

Yesterday, Bharti announced it would take over the spectrum, mobile customers and associated infrastructure of Tata Teleservices in a ‘cash free, debt free’ deal.

Fitch believes the benefits from additional spectrum, fibre assets and subscribers will more than offset the additional spectrum liabilities.

“The deal would help arrest the decline in Bharti’s EBITDA and bolster its 4G spectrum portfolio and network position. Tata Telecom will exit the consumer mobile segment, avoiding future investment requirements and potential further losses,” the ratings agency said.

Bharti will gain about 178.5 MHz of spectrum in the 850MHz, 1800MHz and 2100MHz bands in 17 Indian telecom coverage areas, the right to use Tata Telecom’s extensive fibre network and 42 million subscribers that will add to its existing Indian subscriber base of 281 million.

“We estimate the consumer mobile business of Tata Telecom generated revenue of around USD1.1 billion-1.2 billion and a small EBITDA profit in FY17, compared with Bharti’s revenue of USD14.7 billion and EBITDA of USD5.4 billion. Bharti’s revenue market share will increase by 4pp-5pp to around 37%-38%,” Fitch said.

It said it will treat the deferred spectrum liabilities that Bharti will take over, as future capex instead of debt.

It said it expects that Bharti will take over only a small part of Tata Telecom’s deferred spectrum liabilities of USD1.5 billion.

“We do not expect the transaction to result in any other increase in debt at Bharti. Tata Telecom will not transfer the USD6.2 billion in on-balance sheet debt and will retain its enterprise business, retail fixed-line and broadband businesses, along with its stake in tower operator Viom Networks.

“Tata Telecom will be responsible for the liabilities associated with Viom Networks. The deal is subject to approval from the telecom regulator, Indian courts and anti-trust authorities, and could be completed in the next 12 months,” it added

The deal is part of industry consolidation that has been accelerated by the entry of aggressive new operator Reliance Jio.

Since Jio’s launch in September 2016, the industry has consolidated into three large operators from over 10 participants.

Weaker telcos have had to exit the market by selling their operations to the stronger telcos, which have had to rethink their long-term plans.

During 2016-17, Telenor sold its Indian operations to Bharti, while Videocon sold its spectrum assets to Bharti and exited the industry.

The second- and the third-largest operators, Vodafone India and Idea Cellular, decided to merge to combine spectrum assets, strengthen balance sheets and reduce cost and capex to compete effectively.

Reliance Communications (Rcom, RD) entered into a standstill period with its lenders until end-2017 to provide time for the company to reduce its USD7 billion in debt.

However, it cancelled a deal with Aircel to merge wireless operations, citing regulatory and competitive reasons.

Both Rcom and Aircel are short of sources of capital to trade their way out of difficulties.

As of July 2017, Jio has gained about 129 million customers, in less than a year, though its investment of USD29 billion has been massive.

“Its aggressive pricing strategy means that its revenue market share of 4%-5% is much lower than its subscriber market share but we expect this to rise to more than 10% by 2018. However, we expect that its tariffs will have to rise in the medium term if it is to earn an acceptable return on its significant investment,” it added.

Kotak Institutional Equities pegged the indirect costs of the acquisition, such as increased tower lease and cancellation charges, of around 4,000 cr.

“For an acquisition cost of Rs 4,000 crore, Bharti gets (1) access to spectrum worth Rs 15,000 crore in MTM value and (2) opportunity for some revenue and EBITDA accretion. We believe the current quarterly annualised wireless revenues of TTSL and TTML are around Rs 7,000 crore,” it said.

Airtel stocks rose 8% today, boosted by the acquisition as well as news that Reliance Jio will be raising its tariff from Thursday onwards.

Follow ULTRA.news
PVR acquires stake in US luxury theater chain iPic PVR Limited, India's largest theater chain, said it agreed to acquire a minority stake in US-based luxury restaurant-and-theater company iPic-Gold Class Entertainment, LLC.The US company operates 16 luxury theaters with 121 screens across 10 States in the United States, PVR s...
SSG Capital increases stake in Cox & Kings group Cox and Kings said Private Equity firm SSG Capital acquired the 34.42% stake held by Rohatyn Group in its subsidiary Prometheon Holdings (UK) Limited. SSG Capital Group also owns 2.72% stake in Cox & Kings Ltd.Prometheon Holdings is the Holding company of Holidaybreak, which...
As Jio reality sinks, Idea abandons ‘limited aggression’ strategy Idea Cellular has abandoned its earlier strategy of 'limited aggression' in dealing with the threat from Reliance Jio and Bharti Airtel, and will be more visible in its counter strikes from now, said CEO Himanshu Kapania."From end October, Idea has shifted its earlier stand ...
Bharti Airtel raises Rs 3,325 cr by selling shares in Infratel Bharti Airtel said it raised Rs 3,325 crore (USD 510 Million) by selling shares in its tower subsidiary.It sold 83 mln shares at Rs 400.60 each. The price was at a discount of 3.6% to the previous day’s closing level.Shares of Infratel opened down by about 4% today due ...
Tata Teleservices loses 7.3% subscribers in October in Maharashtra Tata Teleservices, the mobile telecom arm of the Tata Group that was sold to Bharti Airtel last month, lost about 7.3% of its nearly 7 mln mobile subscribers in Maharashtra and Goa, according to a regulatory filing by the company.Tata Telservices Maharashtra Ltd, as the compa...
American Tower Corp buys towers of Idea and Vodafone in India for $1.2 bln Vodafone India and IdeaCellular Ltd said they agreed to sell their standalone tower businesses in India to the local unit of American Tower Corp for an aggregate enterprise value of Rs 7,850 cr (US $1.2 billion).In case the sale is completed before the merger of Vodafone Ind...
Just Dial says no acquisition proposal from Google ‘yet’ Just Dial, the local classifieds company, said it "does meet relevant corporates for exploring any business or strategic opportunities and tie-ups", but there is no proposal to be acquired by Google "as of now".The statement came in response to a report in the Business Stand...
Bharti Airtel unveils new postpaid plan 499 with 20 GB data Bharti Airtel said it had introduced new 4G plans for its postpaid, or contract, customers, bringing some of the benefits that were hitherto available only to the prepaid segment.The new plan has been priced at Rs 499 plan for the postpaid segment.However, compared to pr...
TeamLease buys 40% of education technology start-up Schoolguru TeamLease Services, one of India’s largest staffing companies, said it has agreed to acquire 40% of Schoolguru Eduserve Private Limited, an Online Learning company that works with 18 Universities.Established in 2012, Schoolguru provides services to Indian Universities to help...
Airtel Broadband users get to ‘carry over’ unused data to next cycle Bharti Airtel said its home broadband users will get to carry over all unused data benefit to the next billing cycle up to a limit of 1,000 GB."This is a first of its kind innovation in the fixed home broadband segment in India. The 'Data Rollower facility will ensure that Ai...
RCom says still talking to Brookfield, others to sell towers Reliance Communications said it is in talks with several parties, including Brookfield Asset Management, to sell its tower assets."The Company is renegotiating the tower transactions with all the interested parties including Brookfield Infrastructure Group," it said.The...
4G prices to stay low for a year – Airtel unveils cheap 1-yr plan If there are people who expect data prices to rise substantially in the next one year, they are probably not working at Bharti Airtel.India's biggest telecom firm by revenue has unveiled long-term recharges that allow users to lock in the current cheap prices for up to a yea...
Ruchi Soya Industries sold to Devonshire Capital Ruchi Soya Industries said global private equity player Devonshire Capital will buy 51% of the company and 100% of certain of its 'branded packaged oils distribution business'.The money will be substantially utilized for payment to all lenders over a period of time, it said. ...
UFO Moviez, Qube announce merger, ratio 64:36 Two of India's top satellite-based cinema feed providers, UFO Moviez and Qube Cinema Technologies, have decided to merge to take advantage of higher scale.The merger ratio and valuation will be 63.6% for UFO and 36.4% for Qube Digital.Currently, UFO supplies its movie fee...
Post Bharti Airtel deal, Tata DoCoMo reaches out to worried subscribers Photo by Adithya VikramTata DoCoMo has started reaching out to customers to prevent them from leaving the network in droves, ahead of a takeover of the mobile operations by Bharti Airtel.Subscribers of Tata DoCoMo, a brand operated by Tata Teleservices, had started porti...
Alembic Pharma buys US-based generics manufacturer Alembic Pharmaceuticals said it bought New Jersey-based generic drug developer Orit Laboratories LLC, which will bring seven approved generics and four applications with it.Orbit has "a team of eight highly experienced scientists," Alembic said, adding that the firm focuses ...
RCom could sell assets to Reliance Jio, go virtual – Fitch Reliance Communications could ink more spectrum selling and sharing agreements with Mukesh Ambani-controlled Reliance Jio, Fitch Ratings said, adding that the Anil Ambani company would end up as a mobile virtual operator after its ongoing restructuring.RCom promoter Anil Amb...
RCom to issue shares to MTS, to pay earn-out fees in case of 4G conversion Reliance Communications said it the company's board has approved the issue of fresh shares in the company to the shareholders of Sistema Shyam Teleservices Ltd, which operates the MTS brand of telecom services in India.RCom's merger with MTS received the government's approva...
Bharti Airtel ARPU falls below Jio’s; but data usage zooms Bharti Airtel, India's largest telecom company by revenue, reported further erosion in its revenue and profit in September quarter compared to the previous June quarter.The company reported revenue of 21,777 cr, down 12.3% compared to a year ago and down 0.8% compared to the...
Bharti Airtel Q2 profit margin up, but ARPU falls Bharti Airtel, India's largest telecom company by revenue, reported further erosion in its revenue and profit in September quarter compared to the previous June quarter.The company reported revenue of 21,777 cr, down 12.3% compared to a year ago and down 0.8% compared to t...