InvestorQ : How will Bharti Airtel benefit from this proposed INVIT structure and is it worth investing in the INIVIT?
Mahima Roy made post

How will Bharti Airtel benefit from this proposed INVIT structure and is it worth investing in the INIVIT?

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Aditi Sharma answered.
3 years ago
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There are three broad advantages for Bharti from the INVIT.

· Firstly, it helps Bharti raise $2 billion and create a war chest to take on Jio competition. It gives Bharti the necessary fire power to take on the pricing and data challenges posed by Reliance Jio. Now, Bharti has a sizable war chest to take on the Jio competition for another few years.

· The INVIT will make Bharti asset-light. In the structure is that assets go out of the balance sheet and into the INVIT. This makes Bharti asset-light business and in the process improves the ROE. Improved ROE means better P/E valuations and the stock becomes a currency for Bharti going ahead.

· Bharti Airtel can put more focus on the services aspects of the business. The focus of Bharti shifts more towards managing the service than the assets. It is here that telecom companies create a differentiator by laying much greater emphasis on the quality and breadth of service provided. Without the INVIT, Bharti Airtel would have remained asset heavy and hence services would have suffered.

Regarding investing in the INVITs you need to take a call on the asset based on your risk appetite and the lock in period and the yields. Remember, INVIT is more like a fixed return instrument so it is not a growth story.

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