Bharti Airtel jumps 7%, hits 52-wk high on fund raising, RJio's IUC move

According to Motilal Oswal Securities, Bharti and Idea could see this as a welcome positive as it could result in an increase in EBITDA by Rs 2,760 crore

Shares of Bharti Airtel hit a 52-week high of Rs 385, up 7 per cent on the BSE on Thursday, after Reliance Jio (RJio) on Wednesday said it would charge 6 paise per minute on off-net calls. The move, analysts believe, would be viewed as sentimentally positive for telecom companies. 

In the past two trading sessions, the stock has surged 13 per cent  and has now surpassed its previous high of Rs 379 touched on August 8.

In a bold move to counterbalance the impact from the Telecom Regulatory Authority of India’s (Trai) consultation paper -- which is contemplating postponing zero termination rate beyond 1st Jan’20 --, RJio announced that all calls made to other mobile operators will be charged at the prevailing interconnect usage charges (IUC) rate of 6 paise/min until the telecom regulatory authority abolishes the IUC charge.

According to Motilal Oswal Financial Services, Bharti Airtel and Idea could see this as a welcome positive as it could result in an increase in EBITDA (earnings before interest, taxes, depreciation, and amortization) by Rs 2,760 crore (offering 10 per cent/65 per cent upside at EBITDA level).

"Further, if the Trai does not abolish the termination charge, Bharti/Idea could benefit additional Rs 1,000/1,520 crore on EBITDA, implying overall gain of Rs 3,760/4,280 crore (+14 per cent/100 per cent)," it added.

The brokerage firm remains positive on Bharti due to its potential free cash flow or FCF break-even position in FY20. The move, it says, could also offer big sentimental positive as it indicates positive trends and re-rate in the telecom stocks given the credence toward the high growth expectation in FY21 and further.

Meanwhile, Bharti Airtel on Wednesday said it has raised $ 750 million (about Rs 5,330 crore) from investors based in Asia, Europe and the US through a hybrid financial instrument.

The stock of Reliance Industries was up 3 per cent to Rs 1,366, extending its previous day gain of 1 per cent on the BSE. Shares of Vodafone Idea were trading flat at Rs 5.88, after rallying 18 per cent to Rs 6.87 on the BSE in intra-day trade today. It has surged 16 per cent in the past two trading sessions.