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Bharti Airtel Jumps 2% As Operator Sees Stable Tariffs Ahead

Shares of Bharti Airtel climbed over 2 percent in Monday’s trade, looking set to extend its gaining streak into the third consecutive session.

The telecom operator expects tariffs to firm up as stability returns to the telecom sector after over two years of intense competition, the top management said in earnings call on Friday.

“Over the last 3-4 quarters, our revenues have kind of flattened out. This quarter, there’s revenue growth. Over a longer period of time, prices are not coming down anymore, so competitive intensity is stable… we’re not seeing any further reduction in prices,” Gopal Vittal, CEO for India and South Asia.

Shares of the company have been ascending since Thursday when it reported a quarterly loss before interest and taxes for its India operations, but a marginal expansion in its local mobile services revenue, the first in several quarters.

On Monday, the scrip hit a high of Rs 355.65 on BSE.

The company attributed the rise in mobile revenue to its ‘Airtel Thanks’ programme that it recently launched. Data traffic in the quarter surged by nearly two-and-a-half times and voice services by 23.4 percent from a year earlier.

Airtel had reported its consolidated results earlier this month, but not announced the India numbers separately at the time as its fundraising exercise including a rights issue was underway.

On a consolidated basis, which includes the performance of its overseas operations, Airtel had earlier this month reported a 29 percent year-on-year increase in net profit at Rs 107.2 crore, boosted by a one-time gain.

Brokerage Motilal Oswal Securities said the company looks well-poised to benefit on industry average revenue per user (ARPU) revival over next 3-4 quarters.

The brokerage has given a buy recommendation on the stock with a target price of Rs 405.

As per the brokerage, the management of the company expects that ‘Airtel Thanks’ with an array of services like entertainment, music, financial services, etc. should drive ARPU.

As per the brokerage, the management of the company expects that ‘Airtel Thanks’ with an array of services like entertainment, music, financial services, etc. should drive ARPU.

“We believe that Bharti Airtel is on course to reach self-sufficiency in terms of free cash flow (FCF) with series of fundraising from the rights issue, Africa IPO and Bharti Infratel stake sale, coupled with lower capex and stable Ebitda. This would allow it to maintain a foothold in the industry despite the hyper-competitive market conditions, and remain well-poised to benefit as industry ARPU revives over the next 3-4 quarters,” Motilal Oswal said.―India Finance News

 

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