IIFL’s Bhavesh Gandhi feels the Bharti-Loop deal will increase the foothold of Bharti Airtel in Mumbai, which is amongst the biggest revenue market in terms of gross revenue.
Speaking on Rs 400-crore debt that Loop has on its books, and whether it will become a part of the deal for Bharti, Gandhi said: “It is difficult to say what Bharti will get as part of the deal but I guess in terms of absolute size at Rs 400 crore – if you compare it with Bharti’s overall debt, it is about Rs 60,000 crore -- it would not add much to the debt which is already very large.”
Karan Mittal of ICICI Direct feels that it is good deal for Airtel, especially for the telecom sector because it points towards the consolidation in the industry.
“With this Airtel will become the largest operator in Bombay and also it will be able to offer data or high speed data services to the subscribers of Loop,” he said.
He feels the subscriber quality which Bharti gets in acquisition of Loop is much better than the other smaller players in the country.
Bharti Airtel on Tuesday acquired Loop Mobile, which has mobile network only in Mumbai circle. Under the agreement, Loop Mobile’s three million subscribers in Mumbai will join Airtel’s over four million subscribers, creating an unmatched mobile network in Mumbai.
The deal will make Bharti the top operator with 7 million subscribers followed by Vodafone with 6.8 million subscribers. According to sources, the deal is valued at Rs 700 crore.
Below is the interview of Bhavesh Gandhi of IIFL and Karan Mittal of ICICI Direct with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.
Latha: All we know that the deal is through and Bharti Airtel will be the new owner of Loop Mobile and service provider for three million subscribers in Mumbai. What does it do to the financials of Bharti?
Gandhi: It is difficult to say with three millions subscribers what is the deal size and what all effects Bharti would get. One must remember that Loop’s licence was going to expire and they hadn't taken part in the auction. So, I guess spectrum holdings are ruled out for gain. The deal will increase the foothold of Bharti in Mumbai, which is amongst the biggest revenue market in terms of gross revenue.
Sonia: Loop has about Rs 400 crore of debt as well, will that also get transferred to Bharti?
Gandhi: It is difficult to say what Bharti will get as part of the deal but I guess in terms of absolute size at Rs 400 crore -- you compare it with Bharti’s overall debt is about Rs 60,000 crore - it would not add much to the debt which is already very large.
Sonia: The press release does not give any financial details at all but we understand that it could be a Rs 700 crore deal. What is your view on how to approach the Bharti stock now and how would you react to this acquisition?
Mittal: I think it is a good deal for Airtel, especially for the telecom sector because it points towards the consolidation in the industry and with this Airtel will become the largest operator in Mumbai and also it will be able to offer data or high speed data services to the subscribers of Loop.
From Loop’s perceptive, since they did not have the economies of scale so their margins and all would have been lower than the consolidated entity of Bharti, but I’m sure that the subscriber quality which the Bharti gets in acquisition of Loop is much better than the other smaller players in the country.
Latha: Will they add anything to their revenues Karan?
Mittal: Yes obviously, I believe Loop’s annual revenue should be above Rs 500 crore in Mumbai circle so that should definitely come.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
