Tariff Hike Might Help Airtel Increase Revenue; Shares Surge By 11%

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Airtel recently reported a loss in its Q4 results, but still, there are chances that the operator will take advantage of the tariff increase. In fact, its shares surged by 11 percent on Tuesday due to a hike in average revenue per user.

Tariff Hike Might Help Airtel Increase Revenue; Shares Surge By 11%

 

"We believe that the result was materially better than consensus & investor expectations and see continued momentum in the stock price on the back of tariff hike benefits," brokerage firm Bank of America said.

Notably, Airtel has managed to increase its shares to the record level of Rs 594.55 per piece, which means 11 percent high. "That Bharti has (a) added as many LTE customers as it has in the past few quarters while (b) maintaining network quality leadership despite a significant jump in both data and voice traffic and at the same time (c) passed on a significant price increase, almost completely, is commendable," Kotak Institutional Equities was quoted by Economic Times.

Airtel Added 12.5 Million Users In Q4 2020

The company has reported Rs. 5,237 crore loss in Q42020. However, the telco received Rs. 154 APRU, and if we compare these numbers with Reliance Jio, then the former is doing well in this segment as Jio got only Rs. 130.

On the other hand, Airtel has added only 12.5 million customers on its platform as the company is shutting down its 3G networks in the country. "Pace of 4G subs net adds was higher than average quarterly net add of 8-10 million except in December 2019 quarter when 4G subs gains were higher (+20.6 million) as Jio started charging for off-net outgoing calls," as per brokerage firm Credit Suisse.

Airtel Wants TRAI To Fix Floor Price

Meanwhile, Airtel wants the telecom regulator to fix the floor pricing, as soon as possible as it believes that tariffs are really low in India. The company has already made its recommendation, and now it is waiting for the final decision. It is worth mentioning that fixing the floor price will help telcos to reduce their debt, but it will put pressure on consumer packets as they have to shell out more money for buying plans and services.

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