Tariff Hike In Prices Of Telecom Companies | What Gaurav Malhotra Has To Say On Telecom Sec?

Gaurav Malhotra, the Executive Director at Axis Capital joins us on the show. Gaurav, hi, good to be speaking with you. The incremental news for today, of course, is the telecom auctions that got done happened fairly quickly, less than 1 1/2 days to be honest, and the overall amount was close to 11340 crores. Was this largely on expected lines or you're a bit disappointed by the muted participation? Yeah, hi. So see we we were expecting it to be muted, right, Because the operators have any which is spent and bid for 5G spectrum in 2022. Most of the spectrum is they wanted this spectrum option was more related to the spectrum which is coming up for renewal for especially for Bharti and Vodafone Idea, which was administered say about 20 years back and it needed to be renewed. So most of or quite a bit of the bidding would have been related to that. And then there is something incremental which operators would have probably paid for. We are still awaiting the details. So on the whole, it was along more or less along expected lines pointed to ask you the way in the last 10 minutes of you know the market, the way Vodafone, Bharti have darted. Is it just a spectrum or is there anything else brewing there? And what do you make of valuations of these two? So see in terms of there is always an expectation of terrified post post elections, right. So I think so maybe the street was expecting that. Now this another event is sort of behind us and maybe now the tariff hike is more imminent. Our house view has been that, you know, anytime in the next one to two months, you should expect some tariff hike. Where we differ from the street is that, you know, the street is expecting around 2 hikes across two years, around 15% each. We, we don't expect two consecutive hikes, but we do expect one larger hike which will happen. So around say 25% in terms of valuation. See, these stocks have moved up. They are sort of fading a little bit ahead of their long term averages, but I think that the Street is generally quite, quite positively viewing this whole tariff increase. Do note that you know the last major increase happened in 2021. So it's almost been three years since the last increase has happened. But you know given just back of the envelope calculations, Gaurav, on how much the tariff hike is going to be given the previous hikes which have been undertaken, who do you think is going to win the ARPU race? Because as per what we understand it will be Bharti once again, see the, the general view is that whichever operator has the more premium subscribers typically will have a better absorption. But we, our analysis actually showed if you look at the last two increases, tariff increases for both RT and Jio, the tariff transmission from the tariff to R2 transmission was almost similar around 6065%. So, so I don't think so there is much difference in, you know, this whole transmission and and who will sort of benefit more or less transmission as far as Jio is concerned and Airtel as well. But what about Vodafone because in the last couple of hike cycles, Vodafone didn't benefit as much as the other incumbents Right now with the balance sheet situation looking better, they doubling into the 5G as well. Do you see this time around to be different for Vodafone versus the earlier cycles? Yeah. So you know, we don't have a formal view on Vodafone. So I would sort of refrain from, you know, giving a giving a view on the name Bharatiya Jio specifically, what is your call? What's the target price? And do you think the tariff hike which has been talked about since a long while now, because post election everybody was discussing that, is it factored in the price already? See obviously part of some part of the tariff increases obviously absorbed and reflected in the, the share prices of party and Reliance. So our target price of parties 1534 for Reliance is 35 or one two. And and you know, I think so around 1515% ish hike, 15 to 20% hike is, is sort of getting priced in into the stocks as as we speak. Gaurav, great to have you on the show. Thank you so much for taking the time and and speaking with us today.