Airtel Could See More Upside In A Two-Player Market: SBICAP’s Rajiv Sharma

Bharti Airtel Ltd. could see net gains in the telecom market from the subscriber base of Vodafone Idea Ltd., at least in the medium to long term, according to Rajiv Sharma, head of research at SBICAP Securities Ltd.

That comes after the Supreme Court dismissed petitions of telecom operators seeking review of the definition of ‘adjusted gross revenue’ that makes them liable to pay thousands of crores in pending dues.

“From a medium- to long-term view, you definitely see there is more upside to Bharti if this were to be a two-player market,” Sharma told BloombergQuint, adding that the company would have to spend up to $5 billion to buy spectrum to cash in on a fresh subscriber base.

Vodafone Idea owes an estimated Rs 44,150 crore in AGR dues to the government, of which Rs 8,400 crore is to be paid by Vodafone Group Plc. It has a total debt of Rs 1,17,300 crore on its balance sheet.

Also Read: Vodafone Idea Partially Recovers On Likely AGR Relief From Government

If the subscriber base of Vodafone Idea is split between Reliance Jio Infocomm Ltd.
and Bharti Airtel in a ratio of 6:4, after factoring in any sharp corrections of Bharti Infratel Ltd.’s share price, Bharti Airtel’s stock could still net gain up to Rs 80—nearly 17 percent over Thursday’s close—if the operator maintains an average revenue per user of Rs 150-160 on the new base, Sharma said..

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