Rs 199 Jio offer impact: After billionaire Mukesh Ambani-run telecom player Reliance Jio launched a new postpaid plan at Rs 199, global brokerage firm CLSA has cut its revenue estimates for Bharti Airtel and Idea-Vodafone. According to the firm, there is risk of Jio’s latest post paid plan on the incumbents. Earlier this month, Reliance launched a new postpaid plan at Rs 199 offering 25GB of data and unlimited voice and SMS.

New Delhi: The merged entity of Vodafone India Ltd and Idea Cellular Ltd is likely to face a conflict of interest when it plans to buy tenancies as the two companies have telecom tower operator American Tower Corp. (ATC) as a preferred vendor and at the same time also have stakes in its rival Indus Towers-Bharti Infratel combine.

New Delhi: The merged entity of Vodafone India Ltd and Idea Cellular Ltd is likely to face a conflict of interest when it plans to buy tenancies as the two companies have telecom tower operator American Tower Corp. (ATC) as a preferred vendor and at the same time also have stakes in its rival Indus Towers-Bharti Infratel combine.

Shares of incumbent operators Bharti Airtel and Idea Cellular tumbled on Friday following Reliance Jio Infocomm’s announcement of a new postpaid plan on Thursday evening after market hours, which has brought the tariff war in a segment (post-paid) that was so far untouched by its disruptive pricing. While shares of Idea Cellular on the BSE fell 11.83% to end at Rs 51.45 each, Bharti Airtel saw a drop of 6.44% to close at Rs 385.70.

With the Supreme Court making it clear that the government cannot insist that telecom companies undergoing merger and acquisition need to pay the one-time spectrum charge (OTSC) levied on them, the telecom department on Thursday said that the Bharti-Telenor deal will be approved in less than a month’s time and that the Idea-Vodafone merger will also be expedited so that it can be completed by June, the time frame set by the companies.

Shares of Aditya Birla Group’s telecom company Idea Cellular crashed more than 8% to an 8-year low in the morning deals on Friday as telecom companies slump on the ‘Zero Touch’ post-paid plan by Mukesh Ambani’s telecom firm Reliance Jio Infocomm. Shares of major domestic telecom players such as Bharti Airtel, Reliance Communications slipped considerably in the early deals on Friday.

The Department of Telecommunications (DoT) is expected to clear the mergers of Bharti Airtel-Telenor and Vodafone-Idea soon, a move that will bring some stabilisation in the telecom sector currently battling financial stress.

According to Telecom Secretary Aruna Sundararajan, the go-ahead for Airtel-Telenor deal is likely within a month whereas that of Vodafone-Idea will also be granted shortly as DoT does not want to create any delays.

Idea Cellular (Idea) reported weak revenue, but better profitability. We believe, Idea and Vodafone’s data capacity utilisation at 78% is high and they will have to accelerate capacity expansion. Idea’s balance sheet is stretched due to sharp fall in ARPU and market recovery is crucial for EBITDA recovery. Given high operating and financial leverage, we expect the stock to be volatile.

Idea Cellular needs to improve its broadband subscriber base by grabbing more 4G customers, and increase investments if it does not want to lag way behind Bharti Airtel and Reliance Jio Infocomm and lose customers to these rivals, say analysts.

"Tight control on costs can only take Idea so far; ultimately the company would need to catch up with larger peers on investments, especially in non-core markets, to be able to stage a revenue recovery," JP Morgan said in a report.

Cash is king, while debt puts you in a bind. Ask Idea Cellular Ltd, perhaps the most leveraged company among India’s surviving telcos. It’s in a catch-22 situation with the decision to monetize its 11.15% stake in Indus Towers Ltd.

Idea has been given two options for its stake in the proposed merger between Indus and Bharti Infratel Ltd. It can exchange it for shares in the combined entity, but this won’t address its high debt levels.

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