Bharti Airtel surges 11% in 3 days after signing 4G network deal with Nokia

The trading volumes on the counter nearly doubled today, with a combined 25 million shares changing hands on the NSE and BSE
Shares of Bharti Airtel extended its gains into third trading session, up 5 per cent at Rs 540 on the BSE on Monday, having gained 6 per cent in the previous two sessions after Finnish telecom gear maker Nokia announced signing a deal worth Rs 7,500 crore with the telecom service provider to enhance the mobile operator’s network capacity in nine circles across the country.

Bharti Airtel was trading close to its all-time high level of Rs 569 touched on February 18, 2020. In comparison, the S&P BSE Sensex was down 5.2 per cent or 1,736 points at 31,981 at 01:40 pm. The trading volumes on the counter nearly doubled today, with a combined 25 million shares changing hands on the NSE and BSE till the time of writing of this report.

“The Company already has a long term strategic partnership with Nokia since a decade for enhancement of the network capacity of its networks, amongst others. As a part of its ongoing business requirements, the Company has renewed and enhanced its on-going relationship with Nokia to boost its network capacity and customer experience,” Bharti Airtel said in exchange filing.

Analysts expect Bharti Airtel’s revenue and EBITDA (earnings before interest, taxes, depreciation, and amortization) for wireless service providers to improve in the January-March quarter (Q4FY20) led by tariff hike taken in December 2019, though the full impact is expected only in Q1FY21 when most users come for recharge.

“We do not see major impact from Covid-19 with some increase in recharges and broadband towards the end of March 2020. We expect subscriber addition of 2 million in Q4 (+3.6 mn in Q3) with some consolidation of SIM (subscriber identity module) in low average revenue per user (ARPU) subscribers (moving to single SIM). ARPU to be up at Rs 142 (aided by price hike in Dec) vs. Rs 135 in Q3. We believe that the exit ARPU Q4FY20 was Rs 150. We expect India’s wireless margin to improve by 80 bps quarter on quarter (QoQ) to 36.7 per cent led by pass-through of price hike,” analysts at Axis Capital said in Q4FY20 preview note.

Analysts at Emkay Global Financial Services, meanwhile, expect Bharti Airtel to record healthy performance with 17 per cent sequential growth in wireless revenue, driven by an ARPU increase of 13 per cent in Q4FY20. EBITDA for could rise 11 per cent QoQ, with margins expanding 132bps, boosted by mobile revenue growth.

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