Bharti Airtel Ltd. is the best performer on India's stocks benchmark this year, jumping 26 per cent and reaching a record on May 19.
Jio and former No. 1 Airtel
have battled over India's telecom market since 2016
Months after billionaire
Mukesh Ambani's upstart wireless carrier swept into the No. 1 spot, a
trounced rival is mounting a comeback, and investors are loving it. Bharti
Airtel Ltd. is the best performer on India's stocks benchmark this year,
jumping 26 per cent and reaching a record on May 19, amid optimism the carrier
will continue to attract bigger-spending users. The stock surged Thursday in
Mumbai after Reuters reported Amazon.com Inc. was in early talks to buy a stake
of at least $2 billion.
The
comeback is a sharp turnaround for billionaire Sunil Mittal after grueling
competition with Ambani's Reliance Jio Infocomm Ltd. knocked Airtel off its
perch in the world's second-biggest wireless market by users. Mittal's company
reported a record loss last fiscal year, while a shock court order to pay $3
billion in back fees forced the operator to raise capital. Another rival --
Vodafone Idea Ltd. -- is struggling to survive under a pile of debt.
"The
market assumed Bharti Airtel would take months to recover from the onslaught of
Reliance Jio," said Arun Kejriwal, director at KRIS, an investment
advisory firm in Mumbai. "But they raised funds from the market and have
moved quickly to take advantage of the duopolistic nature of Indian telecom
landscape."
Jio
and former No. 1 Airtel have battled over India's telecom market since 2016,
when Ambani pushed his way in with a 4G service that offered free calls and
cheap data packages. That war of attrition prompted money-losing carriers to
exit or merge with others, leaving only three non-state carriers, from about a
dozen a few years ago.
Facing a demand from the
government for $4 billion in back fees, one of the survivors, Vodafone Idea, is
cutting back coverage to save money and has said it will probably need
government help to stay in operation.
Jio, Airtel and
Vodafone Idea didn't respond to emailed requests for comment.
With an emerging
duopoly, there is more at stake than just gathering hundreds of millions of
subscribers and collecting monthly tariffs. Mr Ambani has placed Jio at the
center of a digital platform he expects to drive his group's growth into
e-commerce, payments and online entertainment.
Airtel has shown it
intends to compete for the same turf through its payments, video-on-demand and
e-commerce divisions. The talks with U.S. online retail giant Amazon are over a
possible 5 per cent stake in Airtel, Reuters said Thursday, citing anonymous
sources. A deal will help Amazon access the Indian wireless carrier's 300
million subscribers.
By adding high-value
users, Airtel poses a rising challenge to Mr Ambani, who's just off raising
more than $10 billion in weeks from Facebook Inc., General Atlantic, KKR &
Co., Silver Lake Partners and Vista Equity Partners. The deals give Jio a formidable
profile, valuing its Jio Platforms Ltd. at more than $65 billion, compared with
Airtel's $40 billion market value.
On Friday, Reliance said Abu
Dhabi's Mubadala Investment Co. will invest about $1.2 billion in Jio
Platforms, extending Ambani's fund-raising streak.
Airtel
is also raising cash to pay down fees related to the court ruling and as it
expands 4G coverage across India. Airtel's parent Bharti Telecom Ltd. last
month said it is seeking about $1 billion by selling a stake in the Indian
mobile carrier after its share price hit a record in May. In January, Airtel
raised $3 billion in a sale of shares and bonds to help pay fees.
The share and bond sales
drew investors despite Airtel's deteriorating profitability amid a price war.
Gains
in Airtel shares helped Mittal add $1.6 billion to his net worth this year,
while Ambani's pile shrank by $1.1 billion, according to the Bloomberg
Billionaires Index.
Airtel
reported a record loss in the quarter ended September as it took a one-time charge
for the fees while holding tariffs down to stem user defections to Jio. Late
last year, Jio announced some fee adjustments that suggested the scathing price
war in India's wireless industry was beginning to end.
Revenue
at Airtel jumped 15 per cent in the quarter ended March, the biggest jump since
2012, to Rs 237 billion ($3.1 billion), the highest since Jio introduced
commercial services in September 2016.
"The
difference between Jio and Airtel is nuanced: while Jio leads in absolute
numbers, Airtel is ahead in terms of high-bandwidth and hence high-value
customers," said Utkarsh Sinha, managing director at Mumbai-based Bexley
Advisors. "There will always be room for two operators."
(Except
for the headline, this story has not been edited by Kavart Media staff and is
published from a syndicated feed.)
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