Telenor factor may add integration risk to Airtel's Tata Tele takeover
16 Oct 2017 5:54 PM GMT
New Delhi: Bharti Airtel's takeover of Tata Teleservices' consumer mobile business will bolster its subscriber and revenue market share but could raise integration risk at a time when the Sunil Mittal-led company is also combining operations with Telenor, S&P Global Ratings has said. S&P said however that Airtel's rating is "unaffected" by its recently-announced acquisition of the Tata Group firm.
"...in our view, this deal increases integration risk for Bharti because the company will be simultaneously integrating the operations of Telenor India (acquired last fiscal) and Tata Teleservices over the next 12-18 months, while responding to the intense competition," it said.
The S&P Global Ratings note added however that it expects Bharti to be able to manage the integration risk because it has successfully managed such deals in the past, particularly in the African markets.
The deal will be neutral to Bharti's leverage in 2017-18 and 2018-19, it said. Airtel will assume a small portion of the deferred spectrum liability but not any debt obligation of Tata Teleservices.
"We believe Bharti is committed to maintaining its credit profile and will continue to take steps to contain its leverage within our rating tolerances," it pointed out. The 'cash free and debt free' acquisition will boost Bharti's India subscriber and revenue market share to 31.9 per cent and 40.6 per cent respectively. The subscriber and revenue market share stood at 27.7 per cent and 34.8 per cent respectively, in the three months ended June 30, 2017.
Like many industry analysts, S&P too believes that the deal will help reduce the gap between Bharti and the new combined force of soon-to-be-merged Idea Cellular and Vodafone India.pti
Telco competition to stay intense over 12-18 months
New Delhi: Competition in the Indian telecom sector is expected to remain intense over 12-18 months despite consolidation as leading operators look to safeguard their turf, according to Moody's.
"While consolidation activity is positive for the industry in the long-term, we still expect competition to remain intense over the next 12-18 months as leading operators -- like Bharti, Vodafone India and Reliance Jio Infocomm Limited - look to protect and grow market share," it said. Bharti Airtel announced last week that it is acquiring the consumer mobile business of Tata Teleservices Limited and Tata Teleservices Maharashtra.
Bharti will take over Tata's mobile operations in 19 circles, including the transfer of all assets (including spectrum) and customers, on a debt-free cash-free basis.
"The acquisition will strengthen Bharti's spectrum holdings and add around 40 million subscribers to the company's leading market position in India's highly competitive mobile telecommunications market, a credit positive," Moody's Vice President and Senior Credit Officer, Annalisa Di Chiara, said.
Chiara added: "This is a non-cash deal and although Bharti will take over a small portion of deferred spectrum payments we do not expect it will have a material effect on the company's consolidated leverage."
Airtel, Millicom close deal to combine Ghana ops
New Delhi: Telecom operator Bharti Airtel and Millicom International Cellular on Monday announced completion of a deal to combine their operations in Ghana. The deal, executed through their respective subsidiaries, will create Ghana's second largest mobile operator with nearly 10 million subscribers and $300 million in revenue. "The combined networks of the two companies will cover more than 80 per cent of Ghana's population, in particular in villages and far flung areas and serve customers with affordable world-class voice/ data services, affordable global roaming and mobile banking services," a Bharti Airtel statement said. Airtel and Millicom will have equal ownership (that is 50:50 each) and enjoy governance rights in the combined entity. The two will also have board representations and management positions in the merged entity.
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