HomeTelecom NewsDoT approves Bharti Infratel-Indus merger: Few more approvals pending but overall positive, says SBICAP

DoT approves Bharti Infratel-Indus merger: Few more approvals pending but overall positive, says SBICAP

One major development seems to be that DoT’s approval has come in and that is positive. So the rest of the approvals could be more procedural in nature, said Rajiv Sharma, head of research at SBICAP Securities.

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By Prashant Nair  February 24, 2020, 3:33:35 PM IST (Published)

DoT approves Bharti Infratel-Indus merger: Few more approvals pending but overall positive, says SBICAP
Bharti Infratel  stock is in focus after the Department of Telecom (DoT) gave the company an approval for its merger with Indus Tower.


Discussing the implications of this development, Rajiv Sharma, head of research at SBICAP Securities said, “There are a couple of approvals, which we understand are still pending. One is from the National Company Law Tribunal (NCLT) and other is from Registrars of Companies (ROC) and that’s why the board has decided to move to a date further so that there is room to accommodate these approvals,” said Sharma.

“One major development seems to be that DoT’s approval has come in and that is positive. So the rest of the approvals could be more procedural in nature,” he added.

According to Sharma, “Vodafone is a key client of the merged entity and Jio has a very small part of it. It’s largely Vodafone and Bharti. So, if anything happens to Vodafone regarding the shutdown because of no relief on the adjusted gross revenue (AGR) side, then the valuations and the profitability of Infratel would be under serious pressure.”

Talking about the outlook for the sector, he said, “Given that there is some noise around DoT, government coming into picture, Mr Birla and Mr Mittal meeting the officials, it seems that some kind of funding is provided to telcos from banks etc., which allows the telcos to fund repayments. They can stagger the repayments over 10-15 years but in that case Vodafone-Idea will not be able to invest in capex and that means that the growth catalyst for Infratel will also be under question mark. So, growth will only come from Bharti and not from Vodafone-Idea. It may allow them to survive but not grow,” added Sharma.
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