Indus Towers rallies 10%, hits over 2-year high; Vodafone Idea up 9%

Shares of Indus Towers hit an over two-year high of Rs 305.65 as they rallied 10 per cent on the BSE in Friday’s intra-day trade. The stock of the tower infrastructure services provider was trading at its highest level since April 2019. In the past seven trading days, it has surged 25 per cent after the government announced reforms in the telecom sector, which have increased Vodafone Idea’s going concern visibility.

Indus Towers Limited (formerly Bharti Infratel Limited) is India’s leading provider of passive telecom infrastructure and it deploys, owns and manages telecom towers and communication structures, for various mobile operators. It caters to all wireless telecommunication service providers in India. Together, Bharti Airtel and Vodafone Group are classified as promoters of the Indus Tower and they held 69.85 per cent shares of the company, as on June 30, 2021.

On September 15, 2021, the Union Cabinet approved a relief package for the telecom sector (telcos) that includes a four-year moratorium on payment of statutory dues by telecom companies as well as allowing 100 per cent foreign direct investment through the automatic route.

Indus Towers' annual report in the financial year 2020-21 (FY21) states that the outlook for the sector remains positive, riding on a huge upsurge in data demand and the need for a better-connected nation in the post-pandemic world. The introduction of new technologies will further intensify the role of passive infrastructure players like us. Indus Towers, with its nationwide presence and several industry best benchmarks, stands in good stead to invest and capitalize on these opportunities, the company said.

Meanwhile, the stock of Vodafone Idea was up 9 per cent at Rs 11.58 on the BSE in intra-day trade today, having rallied 30 per cent in the past seven trading days. It had hit a high of Rs 12.37 on September 17, in intra-day trade.

Analysts at ICICI Securities expect Vodafone Idea to fight back for a fair market share as cash flow issues have been postponed to FY26. “Our analysis shows Vodafone Idea does not need much cell site addition, but it needs to expand 4G BTS which comes at marginal cost (loading charges). Further, tenancy expansion from 5G is at least 2-3 years away and visibility on other businesses such as fibre is limited,” the brokerage firm said.

These measures at best would help in the survival of Vodafone Idea at least for the next four years as annual outgo of Rs 22,000 crore (Rs 14,000 spectrum dues and Rs 8,000 AGR dues) would be pushed by four years, brokerage YES Securities said. “Vodafone Idea needs to step up its capex to improve network capacity/ coverage to catch up with peers. The average revenue per user (ARPU) level in the sector remains unsustainable and a hike in tariffs is much needed to improve the operating cash flow of Vodafone Idea,” the brokerage firm said.

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