Airtel shares surge 5% on NSE amid tariff hike speculations

Shares of Bharti Airtel jumped five percent on the NSE on April 18, making it the biggest gainer on the Nifty 50 index amid expectations of tariff hikes, providing big relief to telecom firms struggling against hypercompetition. Brokerage firm IIFL Securities said that players such as Bharti Airtel and Reliance Jio could benefit from ‘higher-than-expected tariff hikes’.

At 2:42 pm, the stock was trading at Rs 1,279.95 on the NSE, up 5.22 percent.

In a report released this week, IIFL Securities analysts said that they expect to see two rounds of tariff increase in the next three years, which could benefit all three telcos – Bharti Airtel, Vodafone Idea and Reliance Jio.

“While we were already building a 20 percent tariff increase in H2FY25, we now build in another round of 15 percent tariff increase in FY2027,” said the report. This could come as good news for telecom companies, who often grapple with paper thin margins and low tariffs.

Additionally, the brokerage also believes that there is a decent chance of a reduction in Adjusted Gross Revenue (AGR) liability, which could be a positive for Bharti and Vi. The brokerage has raised the target price for Bharti Airtel to Rs 1,379. This implies an upside of 13 percent from the last close of Rs 1,216.15.

In an interview with Moneycontrol on February 27, Bharti Enterprises Chairman Sunil Bharti Mittal said that the ARPU of Bharti Airtel was the highest in the industry but reiterated that their first goal would be to reach the Rs 300 level.

Separately, Bharti Airtel also announced that it will merge its Sri Lanka operations with Dialog Axiata in an equity swap deal.

On the Airtel Lanka deal, the company added that Sri Lanka-based telecom operator Dialog will acquire 100 per cent of the issued shares in Airtel Lanka, “in consideration of which Dialog will issue to Bharti Airtel, ordinary voting shares which will amount to 10.355 per cent of the total issued shares of Dialog by way of a share swap”.

Bharti Airtel is yet to announce its Q4 and full year earnings. In Q3, Bharti Airtel reported a consolidated net profit of Rs 2,442.2 crore for the quarter ending December 2023, growing 54 percent from the same quarter in the previous fiscal. Revenue for the same period was Rs 38,339 crore, up 6.3 percent from Rs 36,062 crore in the year-ago period. Moneycontrol