Bank of America (BofA) Securities has raised the share price targets on Indian telecom companies as the near-term momentum is expected in the sector. In addition, BofA has upgraded its rating on Vodafone Idea Limited (Vi) from ‘underperform’ to ‘neutral’, and sees 9- 16 per cent upside in shares of Bharti Airtel, Indus Towers Limited, and Reliance Industries.
BofA expects a tariff hike of 20-25 per cent as against earlier expectation of 10-15 per cent, which could improve cash flows that will be utilised by telecom companies to grow high margin fibre broadband and enterprise, or data-centre offerings.
It added that Vi has the highest chances to leverage the tariff hikes, and is better placed to improve business after its fundraise. Further, Indus Towers is set to indirectly benefit from the cash flows and expansion in Vi.
It further added that Airtel and Reliance Jio are expected to use the additional cash flows to invest and grow their fibre broadband, enterprise, data centre, and digital business post the tariff hike.
