A day after the announcement of Reliance Jio Infocomm inking a telecom tower sharing agreement with Bharti Infratel, the scrip of Bharti Infratel zoomed 4.47 per cent to close at ₹199.95 on Wednesday. This was after the stock hit an all-time high of ₹214 in intraday trade.
“The stock price soared on expectations of an increase in revenues to Bharti Infratel. We expect some more upside to this,” said Alex Mathews, Head — Research, Geojit BNP Paribas Financial Services.
Shares of Reliance Industries, the parent company of Reliance Jio, closed 0.95 per cent down from its previous close to end at ₹806.90. “The utilisation of Bharti Infratel’s assets will increase and that is the main reason for the rise in stock price. The deal would also help in improving the company’s tenancy rate (operators per tower), which at present stands at about 1.7-1.8,” said Ankita Somani, IT and Telecom Analyst at Angel Broking.
Bharti Infratel, a subsidiary of the country’s largest telecom operator Bharti Airtel, has more than 82,000 telecom towers. Of these, the company owns about 35,000 and the remaining rest with Indus Towers, where Bharti has 42 per cent equity stake.
Industry analysts expect Reliance Jio to hire at least 5,000 towers in FY15. Bharti Infratel, however, did not divulge the number of towers it would be leasing out to Reliance Jio, or the deal size.
In April last year, the two companies signed an international data connectivity agreement, wherein Bharti Airtel would provide Reliance Jio data capacity on its i2i submarine cable.
Other telecom stocks fallTelecom stocks fell during the day, with Reliance Communications sliding 0.5 per cent, Bharti Airtel 1.67 per cent and Idea Cellular 0.53 per cent from their previous close on the BSE.
“There is a lot of financial burden on telecom companies following the spectrum auctions. The bidding was at higher rates and this would result in an increase in interest payouts, while companies also incur higher costs to run operations,” Ankita Somani said.