Bharti Airtel extends fall; down over 5% in two days

The stock dipped nearly 4% to Rs 322, extending its previous day's 2% decline on the BSE.

Bharti Airtel has dipped nearly 4% to Rs 322, extending its previous day’s 2% decline on the BSE, after the company announced that it plans to invest Rs 60,000 crore over the next three years to expand its network.

This investment of Rs 60, 000 crore is over and above the Rs 1, 60,000 crore Airtel has already invested in its active and passive network, spectrum, fiber, submarine cables and systems till date, Bharti Airtel said in a release.

Naval Seth and Ashsih Agarwal, analysts at Emkay Global Financial Services believe that significant step-up in capex clearly reflects fear of disruption by Reliance-Jio (R-Jio) and it would keep the balance sheet stretched.

Moreover, as competition is going to accelerate post R-Jio we believe return on equities (RoE’s) on incremental capex would remain under pressure, hence delaying pay-back on investments, analysts said in a report dated November 30, 2015.

Heightened competition, rising capex spends, stretched balance sheet and sub-par RoE and return on capital employed (RoCE) would restrict valuation uptick for the sector in medium term, added report.

At 13:48 PM, the stock was down 3.4% at Rs 323 as compared to a marginal 0.01% gain in the S&P BSE Sensex. The trading volumes on the counter more than doubled with a combined 6.34 million shares changed hands on the BSE and NSE so far.