“Given the limited overlap in the operations of Bharti Infratel and Indus Towers, synergies from the merger are likely to be limited to savings on administrative overheads,” Jeffries said in a report.
CLSA said only 4 out of 22 circles pan-India overlap in operations, but, even a 10% or so reduction in employee and other costs could lead to about 3% higher earnings.
The brokerage also estimates an extraordinary dividend of Rs 4,800 crore, about 8% of the yield in next three months.
The two year long merger deal between the two tower companies concluded last week, with UK’s Vodafone group and Bharti Airtel now holding 28.1% and 36.7% stakes in the new company respectively. Vodafone Idea cashed in Rs 3760 crore by selling its 11.15% stake in Indus Towers.
CLSA expects likely stake sales by telcos in the the tower company, coinciding with improving growth outlook, which could rerate the stock.
“With Bharti Airtel’s higher 37% ownership versus Vodafone’s 28% (Vodafone also owns 44% of Vodafone Idea) which is pledged, changes in towerco shareholding are likely,” CLSA said.
“With a potential fall in telco ownership, the towerco EV/Ebitda multiple could rerate, as it also coincides with an improving growth outlook. Mobile operators are getting stronger while tariff hikes and active infra/5G are new opportunities,” it said.
The merged towerco as of 1HFY21 had 172,000 towers with tenancy of 1.83x, annualised revenue of Rs 25,400 crore, and Ebitda (earnings before interest tax depreciation and amortization) of Rs 12,500 crore, CLSA said.