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Bharti Airtel gains market share leadership from Jio

Bharti Airtel announced that it will acquire Vodafone Plc’s 4.7% equity stake in Indus Towers. On the other hand, the telco has led on market share gains in 9MFY22, as per Telecom quarterly financial data for 3QFY22 released by TRAI. The series of events have led to analysts maintain their Buy rating on Bharti Airtel shares.

Market share gains for Bharti Airtel and Reliance Jio have been driven mainly by A and B Circles, which, combined, account for more than 70% of revenues for the two telecom operators.

Bharti Airtel has led market share gains in Metros and A-Circles, gaining 200-360 bps market share in these circles over 9MFY22. Interestingly, in 3QFY22, Bharti has been able to gain market share leadership in Metros from Jio, highlighted Jefferies in a note.

“Over the past three quarters, VIL’s market share has been steady. Given this, accelerated market share shifts are unlikely in the near term; thus, growth should largely be led by tariff hikes. In this regard, the recent shift in focus by Bharti and Jio is a step in the direction. We maintain Buy rating on Bharti. Our price target of ₹910 is SOTP-based,” said analysts at Jefferies.

Meanwhile, through the Indus transaction, Bharti plans to strengthen its holding in Indus Towers that will secure steady services and protect its value in the company, and receive healthy dividends.

With Google’s fund infusion and strong operating cash flow from tariff hikes, domestic brokerage house Motilal Oswal believes Bharti should see a healthy deleveraging of ₹80-100 billion and sustained annual deleveraging of ₹200 billion going forward.

“We see potential re-rating upsides in both the India and Africa businesses, aided by steady earnings growth. Assigning a FY24E EV/EBITDA of 10x/5x to Bharti’s India Mobile/Africa business, we arrive at our SoTP-based target price of ₹910,” Motilal Oswal added. Livemint

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