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.
However in the same breath it cautioned that market share numbers are prone to significant changes, given the intense price competition in the Indian telecom sector.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
Retirement Planning: SIP+SWP combination; Rs 15,000 monthly SIP for 25 years and then Rs 1,52,000 monthly income for 30 years
Top Gold ETF vs Top Large Cap Mutual Fund 10-year Return Calculator: Which has given higher return on Rs 11 lakh investment; see calculations
Retirement Calculator: 40 years of age, Rs 50,000 monthly expenses; what should be retirement corpus and monthly investment
SBI 444-day FD vs Union Bank of India 333-day FD: Know maturity amount on Rs 4 lakh and Rs 8 lakh investments for general and senior citizens
EPF vs SIP vs PPF Calculator: Rs 12,000 monthly investment for 30 years; which can create highest retirement corpus
Home loan EMI vs Mutual Fund SIP Calculator: Rs 70 lakh home loan EMI for 20 years or SIP equal to EMI for 10 years; which can be easier route to buy home; know maths
12:59 PM IST