In a report titled "Positive Sum Game," broking firm Ambit has presented an optimistic outlook for the telecom sector, predicting an era where all players benefit from sustained growth.
The firm anticipates that supportive government policies will drive consistent tariff hikes until 2030, moving away from the expectation of a single, isolated hike.
Ambit forecasts a 20% tariff hike in September 2024, with subsequent 12% hikes every two years until 2034.
The firm has reinstated its buy recommendation on Bharti Airtel , considering it the best bet on the upcoming telecom tariff reset and significant events like the Jio IPO.
Ambit has set a target price of Rs 1,663 for Bharti Airtel.Ambit has also upgraded its stance on Vodafone Idea and Indus Towers .
In a report titled "Positive Sum Game," broking firm Ambit has presented an optimistic outlook for the telecom sector, predicting an era where all players benefit from sustained growth. The firm anticipates that supportive government policies will drive consistent tariff hikes until 2030, moving away from the expectation of a single, isolated hike. Ambit forecasts a 20% tariff hike in September 2024, with subsequent 12% hikes every two years until 2034. This steady increase in tariffs is expected to bolster the industry's revenue growth, which Ambit now projects to be around 13% annually for the next five years, a notable revision from earlier estimates.The growth narrative is not limited to mobility services. Telecom companies are expanding into adjacent areas such as home broadband and enterprise services, including Data Center and Cloud Communication offerings. Additionally, potential internet taxes on OTT (Over-The-Top) platforms could lead to revenue-sharing arrangements, providing another incremental income source for telecom operators.Ambit remains positive on the sector despite the FY24 re-rating. The firm has reinstated its buy recommendation on Bharti Airtel , considering it the best bet on the upcoming telecom tariff reset and significant events like the Jio IPO. Ambit has set a target price of Rs 1,663 for Bharti Airtel.Ambit has also upgraded its stance on Vodafone Idea and Indus Towers . Vodafone Idea's target price is Rs 21, while Indus Towers is pegged at Rs 411.In Rajasthan, Bharti Hexacom enjoys a dominant position, commanding 70-80% of its revenues in a cosy duopoly. As the market leader, Bharti Hexacom stands to benefit significantly from rising telecom tariffs. Ambit has expressed bullish sentiments on Bharti Hexacom, setting a target price of Rs 1,550.However, Ambit has issued a "sell" recommendation for Reliance with a target price of Rs 2,600.Ambit believes these factors will contribute to a "positive sum game" for the entire telecom sector, with companies well-positioned to capitalise on the sustained tariff hikes and diversified revenue opportunities.
