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MarketScreener Homepage  >  Equities  >  MUMBAI STOCK EXCHANGE  >  Bharti Airtel Ltd    532454   INE397D01024

BHARTI AIRTEL LTD

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Indian court rejects plea for relief on $13 billion telco levy; Vodafone tumbles

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01/17/2020 | 02:01am EST
FILE PHOTO: A hotel employee clears a table after Vodafone Group and Idea Cellular news conference in Mumbai

Shares of Vodafone Idea fell as much as 40% on Friday, losing $975 million in market value, after India's top court rejected mobile carriers' petitions for a review of its order to pay billions of dollars in levies to the government.

India's mobile carriers had filed petitions to review an October ruling by the Supreme Court that upheld a long-standing government demand that wireless carriers pay 920 billion rupees (9.95 billion pounds) in overdue levies and interest.

The court's rejection on Thursday of petitions by Vodafone Idea, Bharti Airtel and the now-defunct Tata Teleservices is likely to add to the financial woes of India's telecoms sector, which has been badly bruised by a price war.

It could also threaten the survival of Vodafone Idea, a joint venture between Britain's Vodafone Group Plc and India's Idea Cellular, as the unit is saddled with about $3.9 billion in overdue payments, the biggest portion of the entire industry levy.

After the October ruling, its parent Vodafone Group had said the situation for its India venture was "critical".

"With Aditya Birla and Vodafone groups unwilling to infuse equity in Vodafone Idea, we see a strong possibility of Vodafone Idea going for bankruptcy," analysts at Credit Suisse said in a note, while suspending their rating and target price on the stock.

"The probability of India transitioning to a two mobile-operator market has increased considerably," it said. It maintained an "Outperform" rating on Bharti Airtel stock.

Shares in Vodafone Idea tumbled as much as 40% to a two-month low on Friday, wiping out nearly $1 billion in market capitalisation. Shares in Bharti Airtel Ltd, which must pay roughly $3 billion, however rose 5% on expectations for a possible consolidation that will bring it new subscribers.

The trio of Vodafone Idea, Bharti Airtel and Reliance Jio, which is backed by Asia's richest man, Mukesh Ambani, controls more than 90% of India's mobile market.

Jio has been the only carrier in recent months to add subscribers to its roster. It won't be impacted by the court ruling because as a new entrant, Jio does not have significant dues to the government.

Bharti Airtel and Vodafone Idea said they were evaluating approaching the court a final time seeking relief on the order under the constitutional rights available to companies in India.

"The industry continues to face severe financial stress and the outcome could further erode the viability of the sector as a whole," Bharti said in a statement.

By Sankalp Phartiyal and Suchitra Mohanty

Stocks mentioned in the article
ChangeLast1st jan.
AIRTEL AFRICA PLC -0.41% 73.7 Delayed Quote.-7.44%
BHARTI AIRTEL LTD 2.77% 533.5 End-of-day quote.17.51%
CREDIT SUISSE GROUP AG -1.29% 13.39 Delayed Quote.3.51%
RELIANCE INDUSTRIES LTD -1.19% 1485.95 End-of-day quote.-1.86%
VODAFONE GROUP PLC -0.08% 154.88 Delayed Quote.5.61%
VODAFONE IDEA LIMITED 4.76% 4.4 End-of-day quote.-28.46%
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Financials (INR)
Sales 2020 870 B
EBIT 2020 89 187 M
Net income 2020 -265 723 M
Debt 2020 966 B
Yield 2020 0,32%
P/E ratio 2020 -10,0x
P/E ratio 2021 93,6x
EV / Sales2020 4,53x
EV / Sales2021 3,91x
Capitalization 2 975 B
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Income Statement Evolution
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Mean consensus BUY
Number of Analysts 28
Average target price 579,44  INR
Last Close Price 545,50  INR
Spread / Highest target 24,7%
Spread / Average Target 6,22%
Spread / Lowest Target -32,7%
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Managers
NameTitle
Gopal Vittal CEO, Managing Director & Executive Director
Sunil Bharti Mittal Chairman
Ajai Puri Chief Operating Officer-India & South Asia Region
Nakul Sehgal Chief Financial Officer
Harmeen Mehta Global Chief Information Officer
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