Bangalore: Shares in India’s Bharti Airtel Ltd fell nearly 7% to its lowest in two months on Tuesday as investors were worried the top mobile firm’s market share would come under pressure from its main rival.
The stock has fallen more than 12% in two days after No. 2 mobile player Reliance Communications Ltd said late on Friday it had received additional spectrum to start GSM services in 14 circles.
“This is likely to increase competition in almost all the circles where Bharti operates,” said Naveen Kulkarni, a telecoms sector analyst with Mumbai brokerage Religare Securities Ltd.
Radio spectrum, which is essential to provide wireless connectivity, is allocated by the government.
Kulkarni said investors were concerned the additional spectrum to Reliance would erode the New Delhi-based Bharti’s long-term subscriber and profit growth.
Shares in Bharti fell as much as 6.8% on Tuesday to Rs845.90, its lowest since 14 November.
At 1:40 pm (0810 GMT), the stock was trading nearly 6% lower at Rs854, while Reliance Communications was down 1.1% at Rs796 in a Mumbai market that had fallen 1.2%.
“It’s basically the allotment of fresh spectrum to Reliance Communications that is taking a toll on the Bharti counter,” Kulkarni said.
India’s mobile market is the world’s fastest growing that has been adding about eight million users a month, mostly on the GSM-platform, thanks to call tariffs as low as one US cent and availability of cheap handsets.
Analysts are upbeat on the sector as only one in five Indian had access to a phone, with total subscribers at more than 225 million in the nation of more than 1.1 billion people.
Companies are making a push to expand to rural areas by launching services in some or all of the 23 zones that make the telecoms market. The rapid growth has led to a paucity of spectrum, the radio frequencies used to transmit voice and data.
Bharti, 30.8% owned by Singapore’s SingTel, provides wireless services using the dominant GSM platform, while Reliance Communications mainly runs on the rival CDMA platform but also has services on GSM technology that it is expanding.
“It’s more of a sentimental thing than any change in business fundamentals for Bharti,” said Sumit Modi, a sector analyst with Emkay Share & Stock Brokers Ltd.
Modi, who has a “buy” rating on Bharti, said current levels offered a good price to buy the stock.
Bharti, which the market values at nearly $44 billion, trades 26.2 times forward earnings, compared with 34 times for Reliance Communications that has a market value of more than $42 billion.