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Brokerages Upgrade Bharti Airtel On Tata Teleservices Merger Plan

Bharti Airtel Ltd. rallied as brokerages including Credit Suisse and HSBC upgraded the stock, citing synergies from the deal with Tata Group.

Bharti Airtel will get four crore customers and assets of Tata Group’s mobile services business, the companies said in a joint statement. The “debt-free cash-free” merger will see Sunil Mittal-led company take control of operations and a small portion of Tata Teleservices Ltd.’s unpaid spectrum liabilities.

Out of the five brokerages analysed by BloombergQuint, three upgraded the view on the Bharti Airtel stock.

Here’s what brokerages had to say about Bharti Airtel-Tata Teleservices deal.


  • Stock Rating: Maintain ‘Underperform’
  • Target Price: Unchanged at Rs 430
  • Bharti Airtel will get 4.2 crore subscribers, 5 percent revenue market share, 71.3MHz liberalised spectrum and access to 1.25 lakh km of fibre from the deal
  • Bharti Airtel’s spectrum share would be boosted by 200 basis points to 26 percent

“The deal would add capacities in Mumbai, Maharashtra and Andhra Pradesh circles on 1800 MHz and in nine circles on 2100 MHz thus strengthening Airtel’s data offering.”

  • The deal would be value accretive for Bharti Airtel
  • Airtel when combined with Telenor and Tata Teleservices would have a 41.5 percent revenue market share, close to Idea-Vodafone’s combined revenue market share of 43 percent

Credit Suisse

  • Stock Rating: Upgraded to ‘Neutral’ from ‘Underperform’
  • Target Price: Hiked to Rs 400 from Rs 320
  • The deal will be ‘significantly value accretive’ for Bharti Airtel shareholders—based on the disclosed financials

Credit Suisse Report This deal meaningfully boosts Bharti’s position vis-à-vis Idea + Vodafone combine taking it neck-to-neck in terms of spectrum, revenue and subscriber market share.

  • The deal will not breach spectrum caps meaningfully
  • Continued risks from Reliance Jio’s aggressive positioning prevents us from turning more constructive on the stock


  • Stock Rating: Upgraded to ‘Buy’ from ‘Hold’
  • Target Price: Hiked to Rs 490 from Rs 421
  • Hiked medium-term earnings before interest, taxes, depreciation and amortisation estimates by 7 percent to factor in the deal
  • Deal will add 5 percent revenue market share

“We believe Bharti Airtel is clearly demonstrating that it is focused on taking all the necessary steps to consolidate its market leadership.”

  • Bharti Airtel may make it difficult for Reliance Jio to continue with its disruptive pricing for long
  • The transaction might imply lower tower company liabilities for Tata as Bharti Airtel may decide to absorb some of Tata’s existing tower sites as some of them enjoy relatively lower rentals


  • Stock Rating: Maintain ‘Buy’
  • Target Price: Unchanged at Rs 495
  • Acquisition will likely be EBITDA accretive for Airtel from the start
  • Expect that the deal will give access for Airtel to 71.3 MHz of liberalised spectrum, about Rs 4,800-5,000 crore of annualised revenues and four crore customers
  • Bharti Airtel will be a key long-term winner given its scale, spectrum footprint and network head-start

Kotak Securities

  • Stock Rating: Upgraded to ‘Add’ from ‘Reduce’
  • Target Price: Hiked to Rs 470 from Rs 430
  • Deal to be positive for Bharti Airtel
  • Bharti will likely to surrender a bulk of the 107.25 MHz administered (non-liberalized) spectrum
  • Believe current quarterly annualized wireless revenues of Tata Teleservices and Tata Teleservices (Maharashtra) are around Rs 7,000 crore
  • Bharti may take over around 30-35 percent or about Rs 3,000 crore and certain operating leases (towers etc.)
  • Expect lease cancellation costs of around Rs 1,500 crore.

“All in, cost of acquisition works out to around Rs 4,000 crore for Bharti.”

Shares of Bharti Airtel rallied as much as 8 percent to Rs 432.6, the most since May 10. 17 of the 35 analysts who cover Bharti now have a buy rating on the stock, according to Bloomberg. The consensus 12-month target price is Rs 429.45.

. Read more on Markets by BloombergQuint.