Till Thursday, stock of Bharti Airtel has corrected 32 per cent from its all-time high level of Rs 612 touched on May 20, 2020, due to investor concerns on mobile tariff hike delay. In comparison, the S&P BSE Sensex has rallied 20 per cent during the same period.
While prima facie, Jio's new plans look aggressive and are cheaper than existing plans offered by the incumbents Bharti Airtel and Vodafone Idea (VIL), a deeper analysis into the plans and consumer behaviour reveal that the situation may not be as bad as being perceived, at least for Airtel, say analysts.
"To retain high average revenue per user (ARPU) post-paid subscribers, Bharti and VIL will have to follow suit with OTT tie-ups and offerings. Until Jan'20, Bharti used to offer three-month free Netflix subscription to its post-paid subscribers under the Rs 499 plan. Although the post-paid subscriber base has been sticky, Jio's lucrative pricing and attractive content offerings may encourage subscribers to port-in if they are not matched by Bharti and VIL," analysts at Emkay Global Financial Services said in sector update.
Bharti's focus to improve and build stronger network is in favor of the company to retain postpaid subs, apart from potential likelihood of content offering match up with Jio. A lack of tariff hike visibility in the near term, success of Jio's renewed post-paid push, delayed reaction from Bharti to counter Jio and the ability of VIL to raise funds will be key factors for Bharti's stock price performance, the brokerage firm said.
"We continue to maintain that the current pricing is not sustainable and therefore expect price hike in the medium to long term... We expect Bharti Airtel to benefit in the medium to long term, given its strong execution and premium position in the sector. We maintain our positive stance on Bharti Airtel with an OUTPERFORM rating and a target price of Rs 700," said a report by Credit Suisse..
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