Shares of Bharti Airtel continued their northward journey for the fourth straight day, up 4 per cent at Rs 554, on the BSE on Tuesday. The scrip is less than 3 per cent away from its record high level of Rs 569 touched on February 17, 2020.
The stock of the telecom services provider has rallied 14 per cent in the past four trading days after Finnish telecom gear maker Nokia announced signing a deal worth Rs 7,500 crore with it to enhance the mobile operator’s network capacity in nine circles across the country. In comparison, the S&P BSE Sensex was down 0.38 per cent during the period.
The strong rally in the stock price has helped Bharti Airtel regain Rs 3-trillion market capitalisation (market-cap)-mark. At 11:48 am, the company’s market-cap stood at Rs 3.01 trillion-level, BSE data shows. The stock has recovered 45 per cent from its low of Rs 381, touched on March 19, 2020, in the intra-day trade.
According to analysts, Covid-19 outbreak has shown limited impact on the telecom sector as a whole due to the services being considered as essential during the lockdown. Besides, they expect telecom companies to have benefited from the surge in demand for voice and data services due to work-from-home scenario as a viable alternative for many companies. However, on the downside, such companies may see lower net subscriber additions in the next 2-3 months.
Despite intense competition from Reliance Jio, Bharti Airtel has successfully retained/migrated its non-4G base to 4G and withstood the competition. In the process, average revenue per user (ARPU) has declined and is still some 30 per cent lower from FY15 when data subscribers were 20 per cent of total subscribers as against 50 per cent today.
“However, the future looks promising with the tariff rates hitting floor and since then have been revised with hikes of 30 per cent in December’19 itself. The present challenges due to Covid-19 have slowed down the process, however, is expected to continue post H1FY21. The management believes that ARPU should move to Rs 300 level for an expectation of 15 per cent return on capital employed (RoCE). Moreover, with majority of the 4G capex over, free cashflows would improve in future,” the brokerage firm Ashika Stock Broking said.