Bharti Airtel –Tata Tele merger is positive for the industry: Fitch

Bharti Airtel –Tata Tele merger is positive for the indu

According to the new report by Fitch Rating, Bharti Airtel Limited's announcement that it plans to acquire the consumer mobile operations of Tata Teleservices is positive for the deal participants as well as the industry.

Fitch Ratings says Bharti's credit profile will improve slightly as it is paying no consideration for the operations, which it would acquire free of debt. The firm believes that Airtel's market share revenue will increase by 4-5 percent, which takes the overall revenue market share to 37-38 percent.

 To be noted, the deal between Tata and Airtel is a 'no cash, no debt basis,' deal. The deal would help arrest the decline in Bharti's EBITDA 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 percent 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 percent. However, 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. The deal is part of industry consolidation that has been accelerated by the entry of aggressive new operator Reliance Jio. Fitch said that

, 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 Idea Cellular 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.