Bharti Airtel stock hits all-time high, RCom, Voda Idea jump; telecom shares gain ahead of Cabinet meeting

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September 15, 2021 11:43 AM

Bharti Airtel, Reliance Communications, MTNL, Vodafone Idea, other telecom stocks gained up to 5 per cent on BSE intraday ahead of the Union Cabinet meeting

Vodafone Idea, Bharti Airtel, Reliance CommunicationsThe Union Cabinet is to meet later today to consider a moratorium on payment of spectrum dues by telecom firms. Image: Reuters

Bharti Airtel share price hit a new all-time high, while other telecom stocks jumped ahead of the Union Cabinet meeting scheduled later today to consider financial relief to embattled companies. Bharti Airtel share price hit a record high of Rs 719.60, rising over 3 per cent on BSE. MTNL stock gained nearly 2 per cent while Reliance Communications added 1.6 per cent. Vodafone Idea stock was also up 0.58 per cent to Rs 8.74 apiece. The Union Cabinet is to meet later today to consider a moratorium on payment of spectrum dues by telecom firms.

Vodafone Idea needs to pay Rs 58,000 crore in adjusted gross revenue (AGR) dues. The Department of Telecommunications (DoT) has proposed that the payment be deferred for a period of four years.Legal observers said if the government decides to provide a deferment of four years towards this payment, it needs to approach the apex court. Officials said so far the matter has not been discussed with the law ministry.

Also read: Govt to only offer cash flow relief to telcos

Analysts say the telecom sector is now more or less a duopoly kind of scenario. “In Bharti Airtel stock, one can see continuous buying support near to Rs 670-690 levels. As far as Vodafone Idea stock is concerned, fundamentals are not clear,” Vishal Wagh, Head of Research, Bonanza Portfolio, told Financial Express Online. In the morning deals, Bharti Airtel was the top BSE Sensex gainer. In the past one month, Bharti Airtel has rallied 13.19 per cent, as against a rise of 5.26 per cent in S&P BSE Sensex.

The telecom industry has been on the radar for both investors and traders over the past week, as the central government has had many meetings with the Department of Telecommunications to help debt-laden telecom companies that are critical to the country’s development. The government is considering a variety of options to financially support telecom companies, including a relief package that could include a one-year moratorium on spectrum payments due in April 2022, as well as monetizing telecom assets through InvIT and REIT instruments, and providing letters of comfort to telecom service providers, said an analyst.

“Apart from that, the cabinet may make two important decisions in the telecom business that could change the industry’s fate. First and foremost, the Cabinet is likely to propose lowering the telecom licensing fee from 8% to 6%. Second, the Cabinet may amend the definition of the Average Gross Revenue (AGR) that the industry has long demanded, allowing them to avoid paying higher interest rates,” Likhita Chepa, Senior Research Analyst, CapitalVia Global Research, told Financial Express Online.

Chepa added that the investors are optimistic about it, given the recent rally in the telecom stocks. If any of the above points are recommended by the cabinet, the telecom stocks may continue to rise for another week. In S&P BSE Telecom pack, barring Tata Communications and Sterlite Technologies, all the stocks were trading in a range of 0.3-5 per cent. Vodafone Idea stock was also up 0.58 per cent to Rs 8.74 apiece.

(The stock recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)

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