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<ul><li>The stock price of Reliance Industries is on the rise after the Supreme Court verdict on how to define <keyword id="728949" type="PERSON" weightage="20" keywordseo="adjusted-gross-revenue">adjusted gross revenue</keyword> (AGR) for telecom operators.</li><li>The stock prices of Airtel and Vodafone Idea, on the other hand, dipped sharply.</li><li>The financial impact of the verdict will be greater on the two legacy players in the market, leaving it weakened against the younger Jio and Mukesh Ambani's deep pockets.</li></ul> Reliance Industries' share price shot up by 1.77% on October 24 after the Supreme Court ruled in favour of the government in defining adjusted gross revenue (AGR) for telecom companies. But, it dipped back to its opening price of ₹1436.25 by end of the day. All telecom operators are now bound to pay a levy to the government⁠— including for past revenue⁠— on not just the money earned from core telecom services but also on dividends, handset sales, rent and profit from the sale of scrap in addition to revenue from services. Airtel will have to pay ₹21,682.13 crore and Vodafone will have to cough up ₹19,823.71 crore to the Indian government, according to the Department of Telecommunications (DoT). Given the huge financial impact on Vodafone and Airtel, they will be considerably weakened to complete against Mukesh Ambani’s Jio and its deep pockets. Both Airtel and Vodafone have huge debts and are bleeding cash in trying to retain customers from moving on to Jio. Reliance Jio also has high debt but its parent company, Reliance Industries, underwent one of the largest capital expenditure exercise by an Indian corporate. Of the $93 billion invested in different verticals, nearly half was invested in Jio. It’s network is already 5G-ready whereas Airtel and Vodafone still have a ways to go to upgrade their infrastructure. The budget set aside for making the network better and buying the 5G spectrum will now go into clearing the government dues . Meanwhile Jio can aggressively move towards acquiring more customers from these two peers.

It’s advantage Reliance Jio after Supreme Court verdict drains Airtel and Vodafone

<ul><li>Airtel has been one of the resilient stocks over the last few months even as the AGR issue and Coronavirus-fueled market crash has wiped off lakhs of crores of investor wealth.</li><li>The Airtel stock could rally thanks to the Jio-Facebook deal and the weakening of Vodafone Idea.</li><li>The Airtel stock has been given a ‘Buy’ rating with a target price of ₹606, which is an upside of more than 20%.</li></ul>Airtel was the market leader before the arrival of <keyword id="6354504" type="DEFINITION" weightage="20" keywordseo="reliance-jio">Reliance Jio</keyword>, but it has since <a href="https://www.businessinsider.in/business/corporates/news/mukesh-ambanis-reliance-jio-becomes-the-largest-telco-by-revenue-and-subscribers-as-industry-shows-signs-of-recovery/articleshow/73667566.cms">ceded its lead position</a> to the Mukesh Ambani-owned telecom company. However, the gap between the two leading mobile service providers may be too huge, according to market experts. When it comes to the market cap, though, Airtel is 1.6 times smaller than Jio. Vodafone Idea, on the other hand, is 39 times smaller than Jio, which is currently valued at ₹4.4 lakh crore <a href="https://www.businessinsider.in/business/news/jio-a-3-year-old-telecom-company-is-now-bigger-than-hdfc-infosys-and-itc-and-indias-largest-bank/articleshow/75290132.cms">after the Facebook deal</a>. <div type="image" title="Jio market cap telecom companies" msid="75533839" hostid="261"></div> <div type="Article" hostid="261" msid="75290132" title="Jio, a 3-year old telecom company, is now bigger than HDFC, Infosys and ITC – and India's largest bank" mstype="2" mssubtype="0"></div> Analysts suggest that Airtel has been one of the more resilient stocks in the market even as the economic downturn and Coronavirus crisis have wiped lakhs of crores of investor wealth. Its strong financials, the weakening of Vodafone Idea and the Jio-Facebook deal have all contributed to Airtel’s stock scaling back to its 52-week high of ₹568. <div type="image" title="Airtel stock 01_01_20 to 04_05_20." msid="75533863" hostid="261"></div> “Airtel has been able to raise funds to meet current AGR demands. In the short-term, Airtel will be the beneficiary if there is any weakening of Vodafone Idea,” said Mahesh Uppal, Telecom Analyst &amp; Director, Com First India told Business Insider. “It is often forgotten that, in general, Airtel and Vodafone, being early entrants to the market, have a higher quality of subscribers, in terms of paying capacity, than their competitors. If the AGR issue does not get resolved to the comfort of Vodafone Idea, Airtel will be best placed to benefit,” he further added. "Expects positive for Bharti Airtel after US based fund Silver Lake partner bought Reliance Jio stake at a premium. Higher valuation on Reliance Jio may positive on Bharti Airtel," <a href="https://twitter.com/MotilalOswalLtd/status/1257514187766460416" data-type="tilCustomLink" style="">said</a>Motilal Oswal. AGR, short for adjusted gross revenue, is a revenue sharing agreement between the Indian government and the telecom companies. According to this agreement, the telecom companies have to share a percentage of their AGR as annual license fee and spectrum usage charges. The Supreme Court recently ordered companies to pay up a disputed amount retrospectively for over a decade. According to the Department of Telecom estimates, Airtel owes ₹35,586 crore to the government. What are the analysts saying? “We retain our constructive view on Bharti Airtel (Bharti) considering its ability to capitalise on the higher data demand tailwind leveraging its strong balance sheet and network capacity,” said Edelweiss Research in its report dated April 20 where it pegged the target price for Airtel at ₹606. <table><tbody><tr><td>Brokerage</td><td>Target price for Airtel</td></tr><tr><td>Edelweiss </td><td>606</td></tr><tr><td>Angel Broking</td><td>594</td></tr></tbody></table> India is <a href="https://www.businessinsider.in/tech/news/heres-why-facebooks-mark-zuckerberg-is-paying-top-dollar-for-a-stake-in-mukesh-ambanis-reliance-jio/articleshow/75286331.cms">expected to add</a> more than 150 million active internet subscribers in the next 12 months, according to IAMAI. Given the weakening of Vodafone-Idea, both as a firm and a brand, the India telecom market is narrowing down to a duopoly between Reliance Jio and Airtel. The difference in market value of the two telcos is just too huge given the growth potential and the lack of competition. See also: <a href="https://www.businessinsider.in/business/telecom/news/india-is-changing-its-mobile-habits-and-that-can-help-airtel-and-vodafone/articleshow/75152973.cms">India is changing its mobile habits and that can help Airtel and Vodafone</a> <a href="https://www.businessinsider.in/business/telecom/news/airtel-signs-7636-crore-deal-with-nokia-to-enhance-4g-network-lay-foundation-for-5g-network/articleshow/75423000.cms">Airtel signs ₹7,636 crore deal with Nokia to enhance 4G network, lay foundation for 5G network</a> <a href="https://www.businessinsider.in/business/corporates/news/reliance-jio-stake-sale-to-silver-lake-boosts-ril-share-valuation/articleshow/75526873.cms">Reliance Jio’s valuation jumps more than half a billion dollars in just 12 days, thanks to Silver Lake</a>

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New Delhi, Nov 20 () Shares of Vodafone Idea and Bharti Airtel remained in heavy demand on Wednesday, with the former surging up to 32 per cent, after announcing a hike in mobile phone call and data charges from December.
 Vodafone Idea shares zoomed 31.72 per cent to Rs 7.93 on the BSE. This is the fourth consecutive day of rise in Vodafone Idea shares. During this time, the scrip has more than doubled.
 Bharti Airtel also rose 3.11 per cent to hit its 52-week high of Rs 452.95, registering its fourth consecutive day of gain. In four days, the stock has gained 24.90 per cent.
 Faced with intense competition and unprecedented statutory dues, Bharti Airtel and Vodafone Idea on Monday announced a hike in mobile phone call and data charges from December saying the increase was warranted for viability of their business.
 "To ensure that its customers continue to enjoy world class digital experiences, Vodafone Idea will suitably increase the prices of its tariffs effective December 1, 2019," Vodafone Idea had said.
 The telecom sector is highly capital-intensive with fast-changing technology cycles that require continuing investments, Bharti Airtel said.
 "It is, therefore, extremely important that the industry remains viable to support the vision of Digital India. Accordingly, Airtel will appropriately increase price offerings in the month beginning December," it added. SUM ANS
ANS

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