Bharti Airtel,Reliance Jio deal a positive for the Indian telecom market,say analysts

The common ground discovered by them could ease off plenty of legacy issues for the sector.

Written by Express News Service | New Delhi | Published: December 12, 2013 3:18:33 am

The infrastructure-sharing deal between Reliance Jio and Bharti Airtel would be positive for the Indian telecom market,say analysts.

On Wednesday when Bharti Infratel stocks were up by 3.79 per cent to close at Rs 184.90 per share on the BSE,which fell by 0.39 per cent to close at 21,171,Kotak Institutional Equities said in a note: “The deal is positive for the industry,as it lowers the possibility of Reliance Industries attempting to disrupt industry discipline. What we are suggesting is convoluted logic,we understand. However,Bharti would not be keen to open its infra at market rates to a player it believes will be disruptive to its bread-and-butter retail wireless business,in our view.”

RIL and Bharti hold opposing views on the pricing of spectrum usage charges. The common ground discovered by them could ease off plenty of legacy issues for the sector.

On Tuesday,Bharti Airtel and Reliance Jio announced to share former’s infrastructure for launching services. The analysis adds,“RIL’s operating expenses on the infrastructure elements covered by the agreement can’t be lower than Bharti’s,even parity would demand massive Bharti-like scale. This has implications for RIL’s ability to be price-disruptive.”

Analysts also forecast cheaper tariff regime for consumers with the coming together of two biggies.

“If the agreement between Bharti and R-Jio is taken to the full logical conclusion as implied by the press release,it could mean a more benign competitive environment across tariffs,vendor negotiations,and even spectrum auctions,” Credit Suisse said in its report.

Projections are also of a 20 per cent increase in revenues for Bharti Infratel with the deal.

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