Bharti Airtel hits record high ahead of 5G services launch; stock soars 6%

Analysts at JPMorgan believe that Bharti Airtel is one of the key beneficiaries of Indian wireless market consolidation.

Shares of Bharti Airtel hit a record high of Rs 808.85, as they rallied 6 per cent in Friday’s intra-day trade, ahead of the launch of 5G services in India on Saturday, October 1.

The stock of telecom services provider traded higher for the fourth straight day. In the past one month, it has rallied 12 per cent, as compared to 4 per cent decline in the S&P BSE Sensex. The stock surpassed its previous high of Rs 797 touched on September 21, 2022.

On September 22, Pastel Ltd, an entity of Singtel, divested 1.58 per cent stake in Bharti Airtel for Rs 7,261 crore through an open market transaction. The stake was picked up by Bharti Airtel's promoter Bharti Telecom, data suggests. Post the transaction, Bharti Telecom’s holding in Bharti Airtel increased to 44.59 per cent from 43.01 per cent.

As on June 30, 2022, Bharti Airtel’s promoters, Bharti Telecom and Indian Continent Investment Limited collectively held 41.89 per cent stake in the company, the shareholding pattern data shows.

Meanwhile, analysts believe that the Indian telecom sector will enter a strong growth phase over FY22-25E, on the back of industry consolidation and increased ARPU discipline. The 5G services in India is anticipated to be in the range of Rs 580 to Rs 1,300 billion by calendar year 2027 (CY27), across connectivity and enterprise market.

That apart, analysts at Prabhudas Lilladhar initiated 'buy' coverage on Bharti Airtel, with a target price of Rs 1,032.

Analysts believe that the telecom major is a compelling play on multiple growth opportunities in the emerging digital economy, given strong brand presence across mobile, enterprise business, home services, DTH and Africa business. With supportive government policies and affordable 5G rollout, Bharti Airtel is poised to utilise the existing 4G infrastructure, said analysts.

"Bharti Airtel's 5G plan will ride on use of existing 4G infrastructure along with 3.5GHz of midband spectrum (acquired recently). This will result in lower operating cost and better utilization of existing assets, as 5G ecosystem user case develops. Also, Bharti’s leadership position in enterprise segment with 32 per cent revenue market share will ride on expanding market size i.e.~2x to Rs 700 billion by 2025 given its presence in IOT, CPaaS, data centre etc," the brokerage firm said.

Besides, analysts at JP Morgan believe that Bharti Airtel is one of the key beneficiaries of wireless market consolidation in India. With focused capex on 4G network and upgrades, it has been strong enough to defend its market share from Reliance Jio during periods of sharp competition, said analysts.

That said, analysts also believe that the telecom major would have preferred to defer the rollout of 5G timeline by a year since India has only 9 per cent of existing phones and 30 per cent phone shipments that support 5G.

"Bharti will match competition in rollout timelines. Moreover, monetization opportunity will be in consumer and enterprise applications that are not there yet and will take time to evolve gradually," the brokerage firm added.