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Telecom: Bharti AIrtel (BRTI.BO, Buy, on our Conviction List)
• Declining regulatory risks: We estimate the incremental newsflow related to cancellation of licenses/imposition of fines will be negative for
new entrants and believe the regulatory environment in the next 12-18 months will be more favorable to incumbents. Given the recent changes
at the telecom ministry, we also now see low risks to the 900 MHz refarming going through in the next 12 months
• Further improvement in competitive dynamics: We believe going forward competitive intensity will further improve and the incumbent
operators will gain incremental revenue market share as 1) their tariffs are almost similar to those of new operators but they have better
coverage and 2) new operators will further struggle to raise funds/refinance debt and risk losing focus on strategy in the near-term (given the
overhang of possible license cancellation)
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