Airtel had already filed a caveat in the apex court, anticipating the department’s move, to ensure that it is allowed to become a party to the case once the hearing starts.
“From a PE perspective, the structure of the proposed Infratel-Indus merged entity is better as there are two big shareholders (read: Airtel and Vodafone), but nobody has a majority stake,” Gupta said.
Jio’s future pricing strategy could induce its financially stressed rivals to increase tariffs even though this could “effectively lead to a loss of market share.”
Analysts aren’t too concerned about Jio’s ARPU that has shrunk sequentially in the March quarter.
Idea and Vodafone urgently need to bring their balance sheets under control. The proposed block sale may help the two telcos do just that.
A failure to take such short-term pain, he said, could leave the market leader weaker if it’s unable to hold on to data customers.
Reliance Jio is likely to outshine older rivals Bharti Airtel and Idea Cellular in the fourth quarter.
An estimated 96 per cent of India’s mobile customers subscribe to pay-and-use services, which is primarily a cash-driven business.
As per latest data by the regulator, Airtel’s RMS is just over 31%, compared with around 37.5% for Vodafone and Idea combines, and 14.5% for Reliance Jio.
Bank of America Merrill Lynch, in a report to clients dated April 13, said any delay in the merger would help rivals Bharti Airtel and Reliance Jio Infocomm gain incremental revenue market share as they could potentially poach high-end consumers from the two merging telcos.
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