Why foreign investors ploughed into India's telecom stocks
FPIs) pumped $991 million in April, a Mint analysis showed, betting on the revival of Vodafone Idea Ltd, expected tariff hikes and rising phone usage. FPIs jostled for shares in Vodafone Idea's ₹18,000 crore follow-on public offering (FPO), India's largest, also sparking interest in tower company Indus Towers, which stands to gain from the telco's planned rollout of 4G and 5G networks. Bharti Airtel picked up as well, as investors eye long-awaited tariff hikes later this year.
“In April, foreign investors showed interest in telecom stocks, likely due to their participation in the FPO of Vodafone Idea," said Abhilash Pagaria, head, Nuvama Alternative & Quantitative Research. The debt-laden telco's FPO anchor book attracted prominent names like GQG Partners, Fidelity Investments, UBS Fund Management, Jupiter Fund Management, Abu Dhabi Investment Authority, Morgan Stanley Investment Funds and Societe Generale. Other than FPIs, mutual funds and domestic financial institutions also queued up for Vodafone shares.
FPIs remain bullish on No.2 telecom operator Bharti Airtel and Indus Towers on hopes of higher average revenue per user (ARPU), Pagaria said. “According to Nuvama Alternative math, Indus Towers is expected to make it to the MSCI Standard Index in the May review, potentially attracting close to $250 million in further investments," said Pagaria, who believes that overall, optimism prevails in the sector. Shares of Bharti Airtel and Indus Towers have surged 26% and 66% respectively so far in 2024, while Vodafone Idea’s stock has dropped 21%.
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