Tuesday, 11 July 2017

Merger with Tata to help Bharti Airtel close gap with Vodafone-Idea

Airtel will face some challenges from a merger: over Rs 30,000 crore in debt and a modest 48 million subscribers of Tata’s mobile service business, breach of market share cap in eight circles, and the need to spend $1.7 billion (over Rs 11,000 crore) to pay market rates for airwaves in the 1800 MHz band held by Tata Teleservices to use them for 4G, they said. 

Bharti Enterprises and the Tata Group held exploratory talks to evaluate a mega alliance involving their telecom, enterprise services, overseas cable and direct-to-home TV businesses, ET reported last week. Both entities have not commented on the matter. 

If a deal gets confirmed “and subsequently completed, Bharti Airtel would have an RMS of 40% on the cellular business front, closing the gap with the potential Idea-Vodafone merged entity (that will command a 44% RMS),” Bank of Amer .. 

Experts see strong business sense for Airtel to buy both the listed Tata Communications, a provider of network, cloud and security services, and Tata Sky. 
“TataComm potentially brings a lot of value to the table by virtue of its sizeable intra-city fibre resources, its sub-sea cable system assets coupled with its strong enterprise business which would complement Airtel’s,” said an analyst at a Mumbai-based brokerage.