Airtel shares rally amidst plans to create world’s largest non-Chinese tower company

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Shares of India’s largest telecom services provider Bharti Airtel rallied in the market even as the key indices Sensex and Nifty declined marginally in today’s morning trade. The significant gain in share value may be attributed to the company’s plan to create the world’s largest mobile tower company outside China. In the morning trade, the company’s stock gained more than 4% in both BSE and NSE.

Bharti Airtel

Earlier, a partnership established among Bharti Airtel, Idea Cellular, Vodafone, and Providence Equity Partners helped in the creation of the world’s largest non-Chinese tower company. Under this deal, Idea Cellular, Vodafone, and Providence Equity Partners have agreed to merge their holdings in Indus Towers into Bharti Infratel Ltd. The combined company will own 100% of Indus Towers.

According to Airtel, the newly created tower company will have the ability to offer high-quality passive infrastructure services to all service providers in the market without any discrimination. The pan-India tower company will provide the support required for providing wireless broadband services throughout the nation.

Yesterday, Bharti Airtel reported its earnings for the fourth quarter that ended on March 31, 2018. While the company posted better than estimated earnings, its profit plunged to the lowest in about 15 years. The sharp dip in profit can be attributed to the extreme market competition following the launch of Reliance Jio. During its earnings announcement, the company also announced a final dividend of Rs.2.5 per share.

The company’s Q4 profit stood at Rs.82.90 crore, which is about 77.8% lower than the profit of Rs.373.40 crore reported a year ago. In the third quarter (ended December 2017), the company reported profit of Rs.305.80 crore.

Another reason quoted behind the rallying of Airtel shares is the interim stay imposed on TRAI’s predatory pricing order. The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) imposed an interim stay on TRAI’s definition of a significant market player. It also noted that service providers must provide services to subscribers of a specific tariff plan without any discrimination.

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