Bharti Airtel concludes spectrum trading agreement with Jio; stock up 2.5%

Shares of Bharti Airtel hit a replacement record high of Rs 638.60, up 2.5 per cent on the BSE within the intra-day trade on Friday, after the corporate announced the closure of its agreement with Reliance Jio Infocomm to transfer the ‘Right to Use’ of Airtel’s 800 MHz spectrum in three circles to Jio The stock surpassed its previous high of Rs 629.15, touched on Thursday, August 12, 2021 within the intra-day trade.

Bharti Airtel during a statement said the corporate has received Rs 1,004.8 crore (net of tax) from Jio for the proposed transfer. additionally , Jio will assume future liabilities of Rs 469.3 crore concerning the spectrum, the corporate said.
In the past one month, the stock of Bharti Airtel has outperformed the market by surging 20 per cent, as compared to 4.8 per cent rise within the S&P BSE Sensex.

Bharti features a clear advantage to further gain high-quality subscribers in both pre-paid and post-paid categories, considering Vodafone Idea’s weak financial position. Despite high India capex in June 2021 quarter (Q1FY22), management reiterated its unchanged annual capex guidance of around Rs 24,100 crore for FY22.

“Although the recent tariff hike for selected customers may be a clear positive, an equivalent within the mass pre-paid segment remains key. Our FY22 estimates already bake in around 15 per cent tariff increase aside from the above-stated changes. Launch of JioPhone Next in Sept’21 are going to be closely watched out for in terms of pricing aggression strategy,” analysts at Emkay Global Financial Services said during a result update.

The company management doesn’t expect average revenue per user (ARPU) to be more dilutive from the present levels i.e Rs 146 and can gradually devour from Q2FY22 because it possesses a far better customer mix. The management continues with an ARPU trajectory of Rs 200 and ultimately Rs 300 going ahead, aided by strong customer conversion from 2G to 4G and other services.

Airtel gaining market share consistently and manage to deliver industry-leading ARPU without increasing the tariff hikes, a far better service mix strong strategy to realize the market share going ahead. We believe Bharti Airtel features a resilient business structure from a long-term perspective and . Ebitda (earnings before interest, taxes, depreciation, and amortization) margins are likely to expand within the near term due to its efficient execution capabilities, analyst at Axis Securities said during a note.