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  1. Bharti Airtel shares surge after Union Budget pushes rural, consumer spending

Bharti Airtel shares surge after Union Budget pushes rural, consumer spending

Bharti Airtel’s shares surged a day after the Union Budget 2017-18 sought to augment rural spending to revive private consumption, raising hopes of strong market opportunities for consumer goods and services companies.

By: | Published: February 2, 2017 5:11 PM
Fox in a henhouse, TRAI (Telecom Regulatory Authority of India), TDSAT (Telecom Disputes Settlement and Appellate Tribunal), Vodafone, , Bharati Airtel, Gopal Vittal, Reliance Jio,Idea Cellular Airtel’s shares ended up 2.45% at Rs 353.5 on BSE, amid mildly positive broader markets. (Image: Reuters)

Bharti Airtel’s shares surged a day after the Union Budget 2017-18 sought to augment rural spending to revive private consumption, raising hopes of strong market opportunities for consumer goods and services companies.

Airtel’s shares ended up 2.45% at Rs 353.5 on BSE, amid mildly positive broader markets. BSE Sensex ended up 0.3% at 28,226.61 points, while NSE Nifty closed at 8,734.25 points, up 0.2% on Thursday.

Earlier Wednesday, the budget, though not being seen as populist, proposed heavy public spending towards boosting rural agriculture sector.

The government chose to concentrate on augmenting expenditures on the sectors that have been most successful and yielded results over the past few years, Finance Minister Arun Jaitley said in a post-budget discussion.

Reliance Jio concerns waning?

Further, India’s largest telecommunications services operator Airtel is also expected to benefit the most out of the possibly abetting competition from Reliance Jio.

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The TDSAT (Telecom Disputes Settlement and Appellate Tribunal) is learned to have directed the telecom sector regulator to submit by Thursday its decision on allowing or banning Reliance Jio free service offers. TDSAT was hearing a complaint by Airtel against the regulator TRAI (Telecom Regulatory Authority of India) for giving a clean chit to Reliance Jio’s free voice and data offers, which have hurt all the other players in the industry with heightened competition.

Brokerages and analysts continue to be bullish on Airtel. Fitch Ratings has said that it expects Airtel to benefit later when Jio starts losing customers upon the start of paid service. Further, Fitch also said Bharti Airtel was in the best position to withstand the competition from Reliance Jio due to its market leadership position and spectrum assets.

Earlier this week, Bharti Airtel Ltd in barely contained words criticised TRAI for letting Reliance Jio create a situation forcing its rivals Idea Cellular and Vodafone India to consider merging their operations to build enough scale that could withstand the competition.

Airtel’s MD and CEO Gopal Vittal said the company welcomes the news of the merger, but added that the two should not have forced into it as a result of the stress on their finances due to Reliance Jio’s free offers.

Reliance Jio’s entry into the telecom space has forced the incumbent players to drastically cut tariffs – as much as by 66% – in order to retain their customer base, and has put the entire sector under tremendous pressure of choosing between protecting margins and user base.

Reliance Jio recently extended its inaugural free voice and data plan till March 31 drawing complaints and criticisms from its biggest rivals Airtel, Vodafone and Idea, who assert that its anti-competitive practices and freebies are hurting the industry. Vodafone went as far as to write down the value of its India business on hyper competition from the new entrant.

 

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