Airtel, Vodafone, Others Jump On Jefferies' Outlook On Telecom Sector

Shares of telecom stocks jumped on Jefferies' outlook on the recently released Telecom Regulatory Authority of India data for the month of July, which suggested Jio and Bharti Airtel Ltd. would continue to gain market share in the near term. This, even as both companies and Vodafone Idea Ltd. saw a decline in subscriber count after taking up tariff hikes.

Vodafone Idea has also secured an approximately Rs 30,000-crore deal with global telecom equipment suppliers Nokia, Ericsson, and Samsung, according to an exchange filing on Sept. 22.

TRAI proposed a 'unified service authorisation' to encompass a range of telephone services, including mobile, satellite, landline, broadband, and internet on Wednesday. This recommendation on the service authorisations framework was released by the telecom regulator, though it did not specifically address over-the-top services.

The regulator called for the central government to issue service authorisations, based on predefined criteria, instead of entering into any entity specific agreement.

In July 2024, the Indian telecom sector witnessed a decline in its active subscriber base by 15 lakh, largely driven by the impact of tariff hikes. The price increases led to a wave of SIM consolidation, with Vodafone Idea bearing the brunt of subscriber losses, shedding 30 lakh users, Jefferies said in a report.

Bharti Airtel and Reliance Jio also witnessed declines, losing 12 lakh and 2 lakh subscribers, respectively. Meanwhile, BSNL gained 29 lakh subscribers, likely benefiting from its decision not to raise tariffs, as per the report.

Vodafone Idea's losses continued, marking the eighth consecutive month of subscriber decline. The company lost subscribers across 19 of its 22 operational circles, further highlighting the challenges it faces in retaining users, amid increasing competition and pricing pressures.

Jefferies suggests that their lower investments in network infrastructure are unlikely to significantly challenge market leaders Bharti Airtel and Jio in the near term.

Shares of Vodafone Idea advanced the most, gaining more than 9% as of 09:44 a.m. Indus Towers Ltd. stock followed, with an almost 6% surge, while Tata Communications and Bharti Airtel were trading close to 2% higher. Mahanagar Telephone Nigam Ltd. and Reliance Industries Ltd. also posted nominal gains of around 0.5%.

This compares to a 0.44% advance in the NSE Nifty 50.