Telecom stocks to watch after FII invest ₹ 7,967 Cr in the sector ahead of upcoming auctions
India’s telecommunications industry is the second largest in the world with a subscriber base of 1.079 billion as of December 2023, including both wireless and wireline subscribers.
India has an overall tele-density of 85.23 percent, with 58.56 percent in the rural market and 133.76 percent in the urban market.
Foreign Institutional Investor (FII) capital inflows into the telecom industry surged in March 2024 at Rs. 7,967 crore, up significantly from Rs. 2,740 crore in February 2024. This spike in investment lifted the S&P BSE Telecommunication index to a 5.2 percent gain in March.
This year, the government will auction eight spectrum bands for mobile phone services at a base price of around Rs. 96,317 crore.
The Department of Telecom (DoT) has pushed the spectrum auction by 17 days to June 6 instead of May 13 and 14 due to elections. The spectrum will be alloted for 20 years, with successful bidders able to make payments in 20 equal yearly instalments.
The telecom sector comprises major players such as Reliance Jio, Bharti Airtel, and Vodafone Idea, who have a large presence in the Indian telecom industry.
Mukesh Ambani-led Reliance Jio’s ARPU, or average revenue per user, climbed by 1.96 percent to Rs. 181.7 in Q3 FY23-24 from Rs. 178.2 in Q2 FY23-24.
On the other hand, in December 2023, Sunil Mittal-led Airtel surpassed Reliance Jio in terms of adding active users, with Airtel having the highest proportion of active subscribers at 99.64 percent. Airtel and Jio added 3 million and 1.21 million active users, respectively. in December 2023.
Moreover, in January, Airtel had 381.1 million active customers, and the company has been leading the additions for two months, while Jio’s active user base increased by 1.1 million to 425.6 million.
Above that, the Board of Vodafone Idea Limited (VIL) approved a fund-raise of up to Rs. 20,000 crores through a combination of equity and/or equity-linked instruments.
The company also remains actively engaged with its lenders for the debt funding, which will come after the equity fund-raise. VIL intends to raise around Rs. 45,000 crores via a combination of stock and debt.
The Indian telecom market size is projected to increase at a CAGR of 9.4 percent over the next five years, reaching Rs. 59.97 lakh crore (or $69.62 billion).
The future of India’s telecom business appears to be bright, with increasing opportunities for both domestic and foreign investment in the coming years.
Written by Shivani Singh
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
