India could move to 2 dominant telcos in Airtel, Reliance Jio

Despite Vodafone Idea giving guarantee, the telcos market is seen gravitating towards a two-player dominant market
India could move to 2 dominant telcos in Airtel, Reliance Jio

NEW DELHI: Despite Vodafone Idea giving guarantee, the telcos market is seen gravitating towards a two-player dominant market with Bharti and Reliance Jio. 

According to a research note by BofA Securities, "We view SC verdictas negative for Vodafone Idea as it stated it doesn't have money to give bank guarantees".

"Even in a scenario VIL gives guarantee, we see telcos market gravitating towards a dominant two player," the report said.

"We await to see if VIL promoters (Vodafone PLC and Birla group)provide guarantees. Their current stance is no incremental investment in the near-term. In this scenario, even if they give guarantee, potentially the India telcos market could still gravitate towards a dominant two player market with both Bharti and Jio (subsidiary of Reliance industries). This is because, VIL may struggle in the medium term to invest in their networks give a sizeable amount of cash may go towards paying the AGR fine/penalty," it added.

"On Bharti, we believe company is better placed given its stronger balance sheet but director guarantee an issue for telcos," it said.

The much awaited Supreme Court hearing on payment of AGR dues didn't end in any conclusive decision as the apex court couldn't decide on the time-frame for paying dues.

The SC asked the telcos to submit a reasonable timeline for staggered payments (20 years is too long as per SC), seeks government view on how to get dues and on security deposit and directs government to reconsider views on PSUs. The next hearing is on June 18. (IANS)

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