Rise in prepaid call charges may lift telcos’ revenues: Indiabulls Securities

MUMBAI: Revenue of Indian cell phone operators, such as Bharti Airtel, may rise next quarter as they increase the cost of prepaid calls after a price war last year eroded earnings, according to Indiabulls Securities.

“Operators have recently reduced talk-time value” on customers’ call-charge cards, Piyush Choudhary, an analyst at Indiabulls Securities in Mumbai, wrote in a note on Friday. “The improving price environment makes us more positive.”

The entry of Tokyo-based NTT DoCoMo and Norwegian Telenor ASA in India last year drove operators to slash call rates to as low as a penny a minute. Bharti Airtel, had posted quarter-on-quarter earnings declines in the last four quarters.

Mr Choudhary maintained his “outperform” rating for Bharti, “neutral” recommendation for Idea Cellular, and “underperform” rating for Reliance Communications.

“This warrants an upgrade in earnings, multiple and target prices.”

The analyst maintained his “outperform” rating for Bharti, “neutral” recommendation for Idea Cellular, which is controlled by the Aditya Birla Group, and “underperform” rating for Reliance Communications, the nation’s second-ranked wireless-phone operator.

Bharti climbed 3.3% to Rs 367.3, headed for the highest close since October 5, as of 2:19 pm in Mumbai trading. Idea Cellular rose 1.4% to Rs 77.6 and Reliance Communications advanced 1.4% to Rs 170.3, compared with a 0.7% gain for India’s benchmark Sensitive Index.