Mumbai: Bharti Airtel, India’s leading mobile operator, rose more than 10% on Friday to its highest level in nearly three months after Credit Suisse upgraded the stock citing stable call tariffs.
India, the world’s fastest-growing mobile market, is signing up new mobile subscribers at a monthly average of 16 million, but call prices have fallen to as low as 0.4 US cents a minute amid stiff competition in the crowded 15-operator market.
Credit Suisse, which upgraded Bharti to “outperform” from “neutral”, said tariffs had been stable in the last eight months and high cost for 3G mobile spectrum had crimped mobile operators’ ability to go for further price war.
At 11:16 a.m., the stock was trading 8.7% higher at Rs305.25, after rising as much as 10.4% to their highest since 15 April. The stock is still down 5.7% so far this year.
Rival Reliance Communications was up nearly 3% at Rs193.30, while the Mumbai market was trading 1% higher. Reliance Communications and the main index are up 13% and 2.2%, respectively, in 2010.
India’s three biggest carriers -- Vodafone’s India unit, Bharti and Reliance — each won key licences in May to offer 3G services in Delhi and Mumbai — the biggest markets in the country.
The auction yielded the Indian government $14.6 billion in revenues, nearly twice what it had expected.
“Revenue market shares are steady, high auction prices could force most players to avoid competitive actions and regulatory risks could be exaggerated,” Credit Suisse analysts wrote in the research report.
“Reasonable valuations could protect downside and lead to a favourable risk-reward profile. We are, therefore, turning positive on the sector.”
Bharti, which completed its $9 billion acquisition of African operations from Kuwait’s Zain last month, trades at 13 times its one-year forward earnings compared to 14 times in Reliance Communications, according to Starmine data.