Bharti Airtel-Tata Tele Merger Will Increase Airtel’s Revenue Market Share by 3-5%: Fitch

Bharti Airtel and Tata Teleservices deal will be a win-win situation for both sides say industry analysts. The deal will improve the market share of Airtel with no financial burden and minus of any asset, said a report from rating agency Fitch.

“Bharti’s credit profile will improve slightly as it’s paying no consideration for the operations, which it would acquire free of debt…benefits from the additional spectrum, fibre assets and subscribers will more than offset the additional spectrum liabilities,” said the report by Fitch.

Airtel Tata Deal

The rating agency also said that Airtel’s market share revenue will increase by 4-5%, which takes the overall revenue market share to 37-38%. To be noted, the deal between Tata and Airtel is a ‘no cash, no debt basis,’ deal.

In addition, the Tata deal will give 42 million customers of Tata Teleservices to Bharti Airtel along with its spectrum license in 19 of the 22 circles virtually free. Fitch also said that the “deal will help arrest the decline in Bharti’s pretax profit and bolster its 4G spectrum portfolio and network position.”

The Fitch report also said that Airtel’s earnings will be down by at least 5% in FY18, thanks to the intense price competition and lower mobile termination rates, but the earnings will improve in FY18 with a growth of 3-5%.

As said earlier, Tata’s 42 million subscribers will be added to Bharti Airtel subscriber base, which takes the overall customer base of Airtel to more than 300 million. Also, Airtel will gain about 178.5 MHz of spectrum in the 850MHz, 1800MHz and 2100MHz bands in 17 the telecom coverage areas. That said, Airtel will only be able to take over a small part of Tata Tele’s spectrum of worth USD 1.5 billion.

“Bharti will take over only a small part of Tata Tele’s deferred spectrum liabilities of USD 1.5 billion. We do not expect the transaction to result in any other increase in debt at Bharti,” the Fitch report said.

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72 Comments on "Bharti Airtel-Tata Tele Merger Will Increase Airtel’s Revenue Market Share by 3-5%: Fitch"

 

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Kaushik
October 16, 2017 4:38 pm 4:38 PM
For interested people: Read the IEEE paper “Assessing VoLTE Performances for Fundamental E-UTRAN Technologies” with ALL References contained inside it – a narrowband carrier does lead to a QoS loss on VoLTE. If Chetan is right and VoLTE will be over a 3 MHz carrier for Airtel, we can assume Jio will win the 4G voice wars, unless Voda-Idea combine come up with something. So much for “proving me wrong”……I wish TT readers understand that there are engineers who work for money and there are scientists who are in it for science and reading the science every day. Electronics is… Read more »
Nikhil
October 16, 2017 7:59 pm 7:59 PM

Thanks!!!!! That’s why I am holding on Idea!!!!! Airtel is pathetic of all time from service to customer care!!!!!

Kaushik
October 17, 2017 1:40 pm 1:40 PM

Airtel is not pathetic in terms of customer service, just extremely SLOW. They take ages to solve issues. Last week’s issue was solved today after a LOT of goading to Airtel customer care…..I am strongly inclined to port to Idea as a result of this.

Kaushik
October 16, 2017 4:34 pm 4:34 PM
Those who want to know about why having 5 MHz carrier is a good thing should go over to IEEE and read the paper on “Assessing VoLTE Performances for Fundamental E-UTRAN technologies” and also read ALL the references contained therein. That will be enough for people to understand why it’s important to have a 5 MHz carrier (at least) for LTE, and the more the better. To compromise on that is to reduce your quality, and it is not expected from Airtel TBH. If Airtel is going to implement VoLTE over 1.4 or 3 MHz carrier as said by Chetan,… Read more »
Chetan
October 17, 2017 9:35 am 9:35 AM
Volte can work on 3mhz minimum. Don’t go into papers and start telling us how much is required for good quality volte. Volte works on data packets and not frequency. Indian operators if thought of quality then would have bought 20mhz of band 3 , and Jio would have been allowed to buy 10 mhz of band 5. Regulations are tough nut in India. Jitna hai ussi mein kaam chalao. But I am not ruling out Airtel buying another 2.5 mhz pan India of band 5 but it all depends of band pricing on next auction. Buying pan India at… Read more »
Kaushik
October 17, 2017 1:36 pm 1:36 PM
I wish you had been this civil to me in the last discussion instead of unnecessary insults like buffoon and duffer and brandishing some ECE degree. Now I can sense you are calmed down. Yes it makes sense IF Airtel can buy another 2.5 MHz. And yes VoLTE can work on 3 MHz but again, as the paper states – packets or circuits are not so relevant except in terms of capacity – because ultimately you are transmitting the same as EM waves anyhow. The problems with narrowband carriers are again exemplified by a higher packet loss and transmission delay… Read more »
Sanjeet
October 16, 2017 10:14 pm 10:14 PM

Absolutely true, thats why most electronic engineers are employed in IT sector.

Chetan
October 16, 2017 10:51 am 10:51 AM
Guys, i have received some valuable inputs on “What Airtel will do with TTSL spectrum” from one of the Senior Airtel network & Strategy guy whom i had met recently at some social circuit. He said 2.5 Mhz TTSL 850Mhz will be liberalised during next auction and another 1.25Mhz will be added to make 3MHZ for Volte . Also 850Mhz will be CA with 2100 Mhz band acquired from TTSL and its own which is used for 3G. 3G operations will be shut down as it doesn’t serve any purpose anymore. For fallback 900 Mhz spectrum will be used for… Read more »
Kaushik
October 16, 2017 1:06 pm 1:06 PM
I fully believe your little strategy guy was making things up on the spot. If true, Airtel should fire him before irreversible damage is done to the company. VOLTE implemented on a 3mhz carrier will neither have capacity nor quality, forget about HD voice. CA can give capacity but quality WILL suffer. That effectively means Jio is the last mile operator for rural coverage and airtel is delivering its future directly into Ambani’s hands. And I thought VOID had hair brained strategy of 2500 mhz, turns out airtel tops it all. BTW gopal vital says 3G here to stay few… Read more »
Chetan
October 16, 2017 2:00 pm 2:00 PM

More over, Volte has nothing to do with spectrum quantity, it requires minimum 256 Kbps speed to run wideband audio and low latency in networks. Hence it is recommended to airtel by its network providers like ericsson, nokia and huawei that Airtel can go ahead and make deal with TTSL and 850 Mhz partial spectrum can be put to use for volte if not anything else… Minimum 3MHZ is required for heavy load of Volte calls. If not convinced, just read books and over google you will understand , instead of barking here….

Kaushik
October 16, 2017 3:54 pm 3:54 PM

Oh, another mistake from Chetan: No need (as per standards) to implement wideband audio in VoLTE (in fact, it will be tougher on a 3 MHz carrier) – you are likely going to see AMR-NB (or regular voice) on that “HD” 3 MHz VoLTE carrier to ease the load.

I guess I understand now why Airtel is unable to commit to using wideband audio at GSMA despite claiming technological superiority in India. Such half measures are only going to take them so far…..

Kaushik
October 16, 2017 3:45 pm 3:45 PM
One word Chetan: Read about Channel Quality Index. Bandwidth is not coming for free. Don’t rattle about your degrees here you insecure little boy. Airtel has more than enough 900 MHz spectrum to implement a proper 4G carrier – so why would it make sense to implement a lean carrier on 850 MHz? I didn’t say it’s impossible to put VoLTE over 3 MHz, I said it’s not recommended. Do you understand the difference? You have x number of users and each one to be provided a specific bit rate codec for encoding their speech at the same time. 3… Read more »
October 16, 2017 6:00 pm 6:00 PM
The thing that needs to be seen first is whether they manage to get all the requisite clearances from the authorities for the acquisition or whether DoT spoils the party by asking Airtel to mandatorily pay spectrum liberalisation fee for the administratively allotted spectrum of tata or surrender it. Similar issue can arise in the case of subscribers being asked to port out by TRAI thus reducing the benefits for Airtel like happened in the case of loop acquisition. Looking at the history of mergers and acquisitions in Indian telecom industry, this one isn’t going to be very smooth. Only… Read more »
Chetan
October 17, 2017 9:49 am 9:49 AM
I think @esmail, you are quoting a wrong example of loop against this deal. If I remember clearly Airtel was only looking at loop lucrative and faithfull subscriber in Mumbai to counter Vodafone but Vodafone played spoiler sport and started asking all 3 mn loop subscriber to port out citing closure threat. Incedently it happens exactly and loop network was empty and spectrum too was expiring in Nov 2014. Hence Airtel called off the deal. In case of ttsl deal, spectrum is the asset Airtel is looking at . Liberalised and non liberalised both. Airtel is currently assuming that they… Read more »
October 17, 2017 11:53 am 11:53 AM
@Chetan what you stated coming from your insider Airtel strategy guy is also his hypothesis about the possible future strategy of Airtel about bidding for an additional carrier in 850 MHz band. What i stated in my comment is my hypothesis about the possible roadblocks in the path of this deal, based on my observation of the past merger and acquisitions that have happened in Indian telecom, and i clearly say that is my personal opinion in the capacity of being an analyst. Being an author of TT doesn’t mean i can’t have an opinion. As a clarification of what… Read more »
Chetan
October 18, 2017 9:34 am 9:34 AM

Okay, NP. Yes DOT playing spoil sport is always a threat but all major telcos r doing extensive lobbying at DOT and other departments. Hence chances of such deals reaching dead end is not possible. Remedies might be suggested in case something grossly encountered and things will be sorted. BTW Tata’s have already given the economics to airtel starting 1st nov for all operations and hence already assumed that things are off their shoulders now.

Kaushik
October 16, 2017 7:00 pm 7:00 PM

Very true esmail. I was surprised to see some declaration of plans when neither approval is done nor spectrum auctions conducted. Seems ppl just love to throw it up in the air.. .

Chetan
October 16, 2017 1:49 pm 1:49 PM

@Koushik, It appears , you are here to prove that you know a lot about networks, But you r feeling frustrated because you are not able to prove any thing. I have proved you wrong at various instances. Not sure what is your area of business interest that you expect his employer should fire him. It appears from your previous comments that you are the right duffer who can be cornered easily as YOU DONT KNOW ANYTING ABOUT MOBILE TECHNOLOGY AND NETWORKS. I AM B-TECH in Electronics and comms.

Kaushik
October 16, 2017 4:01 pm 4:01 PM
P.S. why did you even ask about my area of business interest? This indicates you have some vested interests here. I am just saying inefficient employees need not be there, causing the company losses. FYI I have in past reported a number of bugs and exploits in Airtel’s backend systems (and a few in Idea’s) over the last 7 years, so instead of calling me a duffer, you ought to think why these things are not thought through by these companies. “I am Electronics and Comms Engineer” is a cop-out of the worst kind, because truly knowledgeable people do not… Read more »
Kaushik
October 16, 2017 3:48 pm 3:48 PM
BTW yes Chetan the guy needs to be fired, as lean carriers will compromise on the network experience. OF COURSE Huawei and Ericsson will push for it – they need to sell their lean GSM solutions! There is no reason for Airtel to use that 850 MHz when they already have a very good 900 MHz spectrum base. The decision that will make most sense is to leave the 2G running on 850 MHz (because 95% handsets support it) and use the rest of the spectrum to enhance 4G. P.S. Why does your “friend’s” statement contract Mr. Vittal? People are… Read more »
Kaushik
October 16, 2017 3:44 pm 3:44 PM

You being B.Tech means nothing – Electronics is not even a real branch BTW, it’s just a side interest of physics.

OTOH I am 100% sure that VoLTE has to be validated and enabled at carrier end for it to function on your handset. Don’t realise how? Understand that in most nations VoLTE is a toggle switch from the operator’s portal i.e. your device only has the hardware and firmware and whether or not you get VoLTE depends on the switch in the website i.e. backend validation. Electronics graduate does not mean you know anything about how things work. OK?

Chetan
October 16, 2017 5:09 pm 5:09 PM

Entire length and breadth of your piece of crap only shows how desperate you are to prove some shoddy point of yours. Now keep writing it to your self .

Kaushik
October 16, 2017 6:58 pm 6:58 PM

Dude, talk technical instead of insulting ppl. You claim to be ECE engineer, go talk to the authors of IEEE paper. Indian engineers have no quality and people like you prove it daily….

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