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Any Fundraise By Bharti Airtel To Hike Capacity Amid Marketshare Shift A Positive: Jefferies

Telecom operator Bharti Airtel's board is slated to meet on August 29 to consider various capital raising options, including equity and debt. Airtel has, however, not divulged the quantum of capital raising under consideration, or the reason behind the move.

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Any capital raise move by Bharti Airtel to enhance capacity in anticipation of large market share shifts from Vodafone Idea "could be seen positively", whereas any potential increase in stake in Indus Towers funded through a capital raise will be viewed "negatively", Jefferies said in a note on Thursday. 

Telecom operator Bharti Airtel's board is slated to meet on August 29 to consider various capital raising options, including equity and debt. Airtel has, however, not divulged the quantum of capital raising under consideration, or the reason behind the move.

In its note, Jefferies said that Bharti's capital raising announcement had come as a surprise given that there are no near term chunky repayments coming up, and added it is unlikely that Bharti would be looking to prepay its spectrum liabilities to the government.

Also, there is no immediate visibility on 5G auctions taking place, it contended. Moreover, in the post-results call three weeks back, the management had expressed that they are comfortable with current leverage levels, the note said.

"A capital raise to enhance capacity in anticipation of large market share shifts from VIL could be seen positively, however, any stake bought in Indus Towers may be seen negatively," it said.

In a separate note on India telecom services, Jefferies said sector revenues grew 14 per cent year-on-year during the first quarter of the financial year 2021-22, driven by 16-18 per cent growth in rural markets.

Citing sector regulator TRAI's latest disclosures, the report said that while Bharti Airtel and Reliance Jio gained revenue market share, "Vodafone Idea lost 230 basis point share, with its top four markets contributing to 62 percent of its market share loss".

"…during 1QFY22, net mobile revenues in India grew 14 percent year on year to an annualised $25 billion," Jefferies said in a report on Wednesday.

Vodafone Idea's continued market share loss in the first quarter of the financial year 2021-22 suggests that the market is moving steadily toward a duopoly, the report claimed.

"Market share shifts continued toward Reliance Jio and Bharti Airtel, with the operators gaining 120 basis points and 170 basis points market share versus their FY21 levels to 39 percent and 35 percent, respectively. Vodafone Idea lost 230 basis point market share, taking its market share to 18 percent, less than half of what it was in FY18," Jefferies said.

Meanwhile, ICICI Securities in its latest report observed that the telecom industry Adjusted Gross Revenue (including national long distance) grew 14.7 percent year on year and 3.7 percent sequentially to Rs 45,700 crore, on continued growth in subscriber base, shift to 4G from 2G, and rising postpaid users.

(PTI)


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