Airtel, Idea to see $200 mn rise in cash flows in FY19 from govt relief

Airtel, Idea to see $200 mn rise in cash flows in FY19 from govt relief

Kolkata, Mar 8: Bharti AirtelBSE -0.55 % and IdeaBSE -0.13 % Cellular are likely to see an estimated $200 million jump in respective cash flows in FY19 with the Cabinet approving select relief measures for the stressed telecoms industry, analysts said.
Cabinet nod for relaxation in spectrum caps, they said, would also help the future Idea-Vodafone merged entity retain all its excess spectrum and also make it easier for struggling fringe players like Aircel sell its airwaves to potentially interested incumbent carriers like Airtel.
Cabinet approval for scrapping of the 50% cap on intra-band spectrum holdings of telcos, according to them, could also pave the way for Reliance Jio to target Reliance Communications’ unsold spectrum in the 800 Mhz band, considered ideal for 4G services.
Market leader Bharti Airtel’s shares fell marginally by 0.55% to Rs 401.20 on BSE, while No 3 carrier, Idea’s dipped 0.13% to Rs 79.50 on the exchange. RCom’s shares were down 0.20% at Rs 25.15.
The Cabinet on Wednesday eased spectrum holding caps and also extended the payments tenure for auctioned airwaves from 12 years (including a two-year moratorium) to 16 years, measures aimed to boost consolidation and improve the health of an industry laden with over Rs 7 lakh-crore of debt and battling brutal price wars.
“The estimated $200 million higher cash flows for Bharti and Idea,” following Cabinet approval of relief measures, “will be particularly beneficial for Idea, which has a net debt-to-Ebitda ratio of over seven times, but will not impact Bharti Airtel as it has a fairly strong balance sheet,” Goldman Sachs said in a note to clients.