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    Telecom shares have many tailwinds, could gain 9-16%: BofA

    Synopsis

    BofA said it expects a tariff hike of 20-25% as against earlier expectation of 10-15%, which could improve cash flows that will be utilised by telecom companies to grow high-margin fiber broadband and enterprise or data-center offerings.

    Telecom shares have many tailwinds, could gain 9-16%: BofAAgencies
    BofA Securities raised share price targets on Indian telecom companies as it expects near-term momentum in the sector. The firm has upgraded its rating on Vodafone Idea from ‘Underperform’ to ‘Neutral’, and sees 9-16% upside in shares of Bharti Airtel, Indus Towers, and Reliance Industries.

    BofA said it expects a tariff hike of 20-25% as against earlier expectation of 10-15%, which could improve cash flows that will be utilised by telecom companies to grow high-margin fiber broadband and enterprise or data-center offerings.

    telecom snip 1

    The firm said that Vodafone had the highest chances to leverage the tariff hikes, and is better placed to improve business after its fundraise. Indus Towers, a major mobile tower installation company, is set to indirectly benefit from the cash flows and expansion in Vodafone.

    Bharti Airtel and Jio are also expected to use the additional cash flows to invest and grow their fiber broadband, enterprise, data center, and digital business post the tariff hike, it said.


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    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

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