India’s second largest mobile service provider Bharti Airtel has shelved plans to amalgamate its digital businesses into the listed entity and demerge its core telecom business into a separate subsidiary. This was announced by the company on Tuesday.
The company cited improved investment outlook and simplified licence framework as reasons behind its decision of not pursuing corporate restructuring.
“The board is of the view that the existing corporate structure of the company is therefore optimal for leveraging emerging opportunities and unlocking value while continuing to scale up Airtel’s digital businesses. Therefore, the scheme of arrangement for the new corporate structure announced on April 14, 2021, stands withdrawn,” the company said in a stock exchange filing.
“With a strong balance sheet and 5G-ready network, Bharti Airtel is well positioned to invest aggressively in the emerging growth opportunities offered by India’s digital economy,” it added. Industry sources said regulatory headwinds have eased for telecom companies after the reforms package announced last October.
It changed the definition of adjusted gross revenue (AGR), rationalised bank guarantees and provided additional moratorium for dues.
According to its original plan, Airtel Digital was supposed to fold into the listed entity. Thus, all its digital assets, including musical streaming app Wynk, content platform Xstream and cloud-based communication platform Airtel IQ, among others, would have been a part of the listed firm.
The company had then said the move will help sharpen its focus in unfolding digital opportunity in India and unlock value. The telecom business was supposed to be shifted to a new subsidiary.
Under a modified scheme, the company will only merge its wholly-owned subsidiary Telesonic Networks, resulting in consolidation of its fibre assets into the listed entity. In addition, Nettle Infrastructure Investments, which is engaged in promoting and funding telecom services, would also be merged with the listed entity. The company will pursue its plan to eventually fold the DTH business (Bharti Telemedia) into the listed entity. This is in order to move towards the national digital communications policy vision of converged services to customers.
Source: Business-Standard