Bharti Airtel shares hit an intra-day peak of Rs 603, before closing 11.34% higher on BSE Tuesday at Rs 599.15, as the telco’s India businesses was boosted by higher data usage and tariff hikes taken last December.
The Airtel stock, in fact, regained its spot as the fifth most-valued firm by market capitalisation, following the sharp surge. Lifting target price by nearly 76%, Ambit said Bharti is a ‘buy and hold’ investment and is likely to benefit from sector rotation.
Airtel CEO Vittal though said tariffs remained unsustainable low, and called on the Telecom Regulatory Authority of India (Trai) to swiftly ring in a floor price for data services. “The submissions have been made, but Trai is yet to take a decision, and this needs to be corrected soon as tariffs remain totally unsustainable.”
In the backdrop of the AGR payments crisis, telcos, in separate submissions, have urged the sector regulator to fix a floor price only for data services for an interim period to ensure their sustainability and keep competition alive.
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Vittal said Airtel’s strong ARPU growth in the March quarter was driven by a combination of the tariff hike (last December) and strong postpaid adds, although an ARPU of Rs 154 was inadequate to turn in a reasonable return on capital. He remained hopeful that it would get to Rs 200 in the short-term, and eventually to Rs 300, saying that’s where “it should be for a business like ours”.
Speaking at an earnings call on Tuesday, Vittal indicated Airtel’s strategy for the upcoming 4G spectrum sale, saying the carrier needs to improve its 4G airwave holdings by adding pan-India sub-GHz spectrum.
He noted that gaps remained on this score in key challenger markets such as Kerala, UP-West and Haryana. His comments came even as the telecom department is poised to appoint an auctioneer on May 22 for the next 4G spectrum sale likely around October.
He was a speaking a day after the telco reported a consolidated net loss of Rs 5,237 crore in the March quarter, mainly stung by one-time expenses relating to statutory dues and write-downs on 3G gear.
