Bharti Airtel climbs 5% on hopes of market share gain, hits 26-month high

The SC rejected the review petitions filed by telecom companies to grant relief on adjusted gross revenue, which have to be paid before the deadline of January 24

Bharti Airtel's stock price surged 5 per cent to hit 26-month high of Rs 499 on the BSE on Friday amid expectations that the telecom company is poised for strong market share gain.

The stock of the country’s largest integrated telecommunications company was trading at its highest level since November 2017. It is 6 per cent away from its all-time high level of Rs 527, touched on October 2007.

The Supreme Court Thursday rejected the review petitions filed by telecom companies to grant relief on adjusted gross revenue (AGR), which have to be paid before the deadline of 24th January 2020.

Last week, Bharti Airtel successfully raised $3 billion -- $ 2 billion via qualified institutional placement (QIP) and $1 billion through foreign currency convertible bonds (FCCBs).

The company said the net proceeds of the fund will primarily be used to augment the company's long-term resources and strengthen the balance sheet, servicing and for repayment of short term and long term debts capital expenditures, statutory dues and long term working capital requirements.

“Assuming no relief, a Voda-Idea shutdown scenario looks highly likely, and just a matter of time, in our view. Hypothetically, if we assume that Bharti adds 40 per cent of Voda-Idea’s subscriber base, our analysis suggests that Bharti may need to at least invest $5 billion in spectrum to accommodate new subscribers,” analysts at SBICAP Securities said in sector update.

Separately, the recent fund raising by Bharti suggests that it may be suitably placed to pay the regulatory dues, but if it has to benefit from a consolidated market structure, another round of fund raising may be required for the spectrum capex as highlighted above, it said.

Brokerage firm Motilal Oswal Securities believes that the final outcome may not be linear and that there could be a payment extension or moratorium to say the least. Irrespective of the outcome, Bharti is well prepared and, along with Reliance Jio (RJio), appears poised for strong market share gains.

Meanwhile, CRISIL expects the average revenue per user (ARPU) of Bharti Airtel to increase to Rs 140-145 in fiscal 2021 from Rs 128 for the quarter ended September 30, 2019. The rating agency, therefore, expects Bharti Airtel to continue with its prudent approach, and maintain net debt to EBITDA1 (leverage) ratio at below 3 times for fiscal 2021.

At 11:36 am, Bharti Airtel was trading 4 per cent higher at Rs 493 on the BSE, as compared to 0.06 per cent rise in the S&P BSE Sensex. A combined 24.1 million equity shares have changed hands on the counter on the NSE and BSE so far.