Bharti Airtel is world's third best telecom share.

Bharti Airtel is world's third best telecom share.

The end of the five-year tariff war in the Indian telecom industry has made Bharti Airtel among the best telecom performer stocks in the world. As per Bloomberg data, Airtel's stock has come in third place in the list of stocks of service provider and equipment maker companies of the world with returns of around 56% so far this year. US wireless data communication products firm Ubiquity Networks and China's telecom equipment provider ZTE are the world's top two telecom stocks. Airtel shares have outperformed the Bloomberg World Telecommunication Index, the capitalization weighted index of the world's leading telecom stocks, by a margin of 45% since the beginning of 2019.

Fasting over ending the price war

Domestic telecom companies have seen better fundamentals ever since they decided to end the Predatory Pricing trend due to deteriorating financial health and too much debt in their books. These companies have increased the tariff of their prepaid plans from 14% to 33%, effective from the first week of December. According to data collected from TRAI, adjusted gross revenue (AGR) of telecom companies declined by 10.1% to Rs 1.44 crore in 2018.

Airtel announced to raise $ 3 billion

The decision of telecom companies to increase tariffs and the decision to hike tariffs while joining with Reliance Jio Infocomm has resulted in rerating of telecom companies. Investors are betting on 40-45% tariff hike from telecom companies present in the market before the entry of Jio, but given the burden of debt and AGR payment on companies due to spectrum, prefer Bharti Airtel over Vodafone Idea Have been. Airtel has announced a $ 3 billion fund raising and its free cash flow has also improved. Due to this, there will be less pressure on the company due to AGR payment.

 Pressure on heavy debt stocks

The huge debt created in Airtel's ledger, however, is keeping the stock under pressure. Bharti Airtel's net debt to EBITDA (this shows how capable the company is in debt payments) is 3.94. Accordingly, Airtel is the fourth largest telecom company in the world with the highest debt to EBITDA.