Telcos’ dues, penalties to weigh heavily on vendors, tower cos

New Delhi: Bharti Infratel, Indus Towers and American Tower Corp (ATC) are bracing for a potential hit on their tower tenancies, due to the monetary pressure on clients Bharti Airtel and Vodafone Idea from the 1000’s of crores they should pay the federal government. The influence could possibly be disastrous if Vodafone Idea collapses below the load of the licence price dues and penalty which are required to be paid by January 23, trade executives and analysts stated.

Shares of Bharti Infratel, the one listed tower firm in India, plunged greater than 13% in intraday commerce on Friday, earlier than closing 10.1% down at Rs 218.30 on the BSE.

The improvement will even influence the income of telecom tools distributors equivalent to Finland’s Nokia, Sweden’s Ericsson, and China’s Huawei and ZTE, even threatening their India enterprise instances. Their India revenues are already below stress as a consequence of decrease spending on community enlargement and upgrades this yr, executives of those corporations stated. “We are closely monitoring the progress,” a Huawei spokesperson stated.

According to analysts, the whole publicity of those tools distributors towards their contracts with telecom operators in India is as excessive as Rs 8,000 crore, together with Huawei India’s Rs 1,200 crore publicity to Vodafone Idea. Exposure to Airtel consists of managed companies. However, distributors aren’t too apprehensive about Airtel as a result of it’s anticipated to resist the scenario.

Queries despatched to Ericsson, Nokia, ZTE, Bharti Infratel, Indus Towers and ATC didn’t elicit any replies until press time Friday. Mahesh Uppal, a director at communications consulting agency Com-First India, stated tower corporations can be damage extra as compared with tools distributors.

Tower corporations are largely native gamers whose market is already below nice stress due to the exits of a number of telecom corporations type the market. An exit of Vodafone Idea will add to this stress, Uppal stated.

The second the trade construction modifications to duopoly, the facility of the surviving operators will go up versus their distributors, companions and clients, Bharti Airtel’s former India chief govt Sanjay Kapoor stated.

“Passive infrastructure as an industry was born on the concept of cost-sharing and that will now get challenged in a duopoly, especially when (Reliance) Jio is building its own towers. Valuation of these tower companies and assets will be in question. The same thing will happen to fibre and any other passive infra assets,” Kapoor stated.



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