Airtel’s stake buy-back in DTH arm from Warburg win-win for both, part of broader digital rejig: Analysts

Kolkata: Bharti Airtel’s decision to buy back a 20% stake from a Warburg Pincus affiliate in its DTH arm, Bharti Telemedia is a win-win for both and also part of the Sunil Mittal-led telco’s broader strategy of reorganising its consumer-facing digital and non-telecom businesses and opening up value unlocking possibilities, say analysts.

The deal, they said, offers Warburg a healthy exit with a 40% return on its 2017 investment, while Bharti limits its cash outflow as it’s paying 70% by shares.

Brokerage Jefferies, though, has questioned Bharti Airtel’s strategic intent, saying the telco has spent around Rs 6,000 crore over the past three months by initially shelling out around Rs 2,900 crore to increase its stake in Indus Towers by 5% and now buying back the Warburg Pincus holding, money that could instead have been spent to buy around Rs 9,000-12,000 crore of 4G spectrum or even make investments in the digital space.