India’s billionaires get global backing
BHARTI AIRTEL’S SUNIL MITTAL IS BACK IN CONTENTION IN THE COUNTRY’S TELECOM WAR
Months after billionaire Mukesh Ambani’s upstart Indian wireless carrier swept into the No. 1 spot, a trounced rival is mounting a comeback, and investors are loving it.
Bharti Airtel Ltd. is the best performer on India’s stocks benchmark this year, jumping 26 per cent and reaching a record on May 19, amid optimism the carrier will continue to attract bigger-spending users. The stock surged on Thursday in Mumbai after Reuters reported Amazon.com Inc was in early talks to buy a stake of at least $2 billion.
The comeback is a sharp turnaround for billionaire Sunil Mittal after gruelling competition with Ambani’s Reliance Jio Infocomm Ltd knocked Airtel off its perch in the world’s second-biggest wireless market by users. Mittal’s company reported a record loss last fiscal year. Another rival — Vodafone Idea Ltd — is struggling to survive under a pile of debt.
“The market assumed Bharti Airtel would take months to recover from the onslaught of Reliance Jio,” said Arun Kejriwal, director at KRIS, an investment advisory firm. “But they raised funds from the market and have moved quickly to take advantage of the duopolistic nature of Indian telecom landscape.”
Jio and Airtel have battled over India’s telecom market since 2016, when Ambani pushed his way in with a 4G service that offered free calls and cheap data packages. That war of attrition prompted money-losing carriers to exit or merge with others, leaving only three non-state carriers, from about a dozen a few years ago.
Market loves a duopoly
With an emerging duopoly, there is more at stake than just gathering hundreds of millions of subscribers and collecting monthly tariffs. Ambani has placed Jio at the centre of a digital platform he expects to drive his group’s growth into ecommerce, payments and online entertainment.
Airtel has shown it intends to compete for the same turf through its payments, video on demand and e-commerce divisions. The talks with US online retail giant Amazon are over a possible 5 per cent. A deal will help Amazon access Airtel’s 300 million subscribers.
By adding high-value users, Airtel poses a rising challenge to Ambani, who’s just off raising more than $10 billion. The deals give Jio a formidable profile, valuing its Jio Platforms Ltd at more than $65 billion, compared with Airtel’s $40 billion market value.
Airtel is also raising cash to pay down fees related to a court ruling and as it expands 4G coverage across India. Airtel’s parent Bharti Telecom Ltd. last month said it is seeking about $1 billion selling a stake in the carrier after its share price hit a record in May. In January, Airtel raised $3 billion in a sale of shares and bonds.