Telecom battlefield and the Idea -Vodafone merger: The fineprint decoded

Aditya Birla-owned Idea Cellular and Vodafone India announced plans to merge the two entities, thereby creating the country’s largest telecom operator with nearly 35% market share. Idea Cellular ended down over 10% on the National Stock Exchange (NSE) on Monday at Rs 97 levels.
Here is a quick compilation of how leading brokerages and research houses across the country have read the deal’s fine print and their stock recommendation for Idea Cellular. Financial Astrology Tips

MOTILAL OSWAL RESEARCH

The telecom battleground is all set to intensify with Idea and Vodafone announcing to merge their businesses in a deal that will create a telecom giant. The deal will allow the merged company to command a leadership position in spectrum (with a 24% share) and broadband sites.The current sub-30% EBITDA margin could scale up to 36-39% over next four – five years, led by synergies and scale benefits. Furthermore, reducing capex requirement and tower sale could lower leverage to around 4x by FY19E. We upgrade Idea to 'Buy' with a target price of Rs 120, implying 9x EV/EBITDA on FY19E for the combined entity. In our view, the rich valuation is justified, as the expected recovery from FY19 could drive EBITDA CAGR of 18% over FY18-22. Astrology and Numerology Trading Tips

EMKAY GLOBAL

In our view, upside (for Idea Cellular) is restricted by: 1) hyper competitive scenario with Jio expected to remain aggressive in race to gain revenue market share; 2) long dated cost synergies and; 3) lack of debt reduction in medium term. Progress on regulatory approvals would also be closely watched as both the entities have number of pending litigations. Commodity Trading Tips