Dialling right

BS Compass

 Based on current prices, the Bharti Tele scrip has outperformed the broad market by a huge margin, having jumped 110 per cent in less than three months time.

 This despite the fact that while the markets started rallying in mid-May, the Bharti Tele stock remained flat at about the Rs 35 levels till mid-July.

 While the upturn in the stock was triggered by the huge jump in subscriber base owing to lower tariffs and the CPP (Calling Party Pays) regime, the TDSAT ruling that WLL services should be restricted only to an SDCA (short distance coverage area) also helped improve sentiment for the stock.

 On Friday, the stock jumped around 13 per cent and now trades at close to the Rs 75 levels. The trigger clearly was the hike in foreign investment limit in telecom services companies from 49 per cent to 74 per cent.

 While the FDI (foreign direct investment) will still be capped at 49 per cent, the proposal is to allow an additional 25 per cent investment limit for foreign institutional investors.

 The foreign holding in Bharti Tele currently stands at over 47 per cent, close to the current limit, and a huge chunk of this is accounted for by foreign direct investors. FIIs hold shares amounting to just 5.48 per cent of the equity, primarily because of the restriction caused by the 49 per cent ceiling.

 This class of investors is sure to jump at the opportunity of the country