Bharati Airtel revises its foreign investment limit to 100%

Bharati Airtel: On Thursday, the telecom provider Bharati Airtel informed the exchanges that it has extended its foreign investment limit to 100%. Airtel notified its investors and market exchanges about the upgraded limit after it received approval for upping the FPI limits for its subsidiary companies to 100%. 

Airtel’s parent company was first to receive go-ahead for increasing its foreign investment limit to 100% by the Department of Telecommunication in January 2020. Gradually its subsidiaries also gained approval for similar extensions. This led to MSCI rebalancing its inflow and outflow of capital in August 2020.

Analysts believed that the change in Airtel’s FPI limit would add to the company’s profile, stock value and would also reflect in the forthcoming MSCI FEB-21 Quarterly Index Review.

“Thus, the weight of Bharti may increase materially in MSCI index and consequent buying by FIIs/FDIs. This coupled with superior execution (market share gain in 4G vs. Jio in recent months) and potential price increase may lead to further re-rating in Bharti,” analysts at Dolat Capital Market Pvt India Ltd said in a note on 12 January.

It was a big leap for the company as last year, after MSCI Emerging Market Index decreased its weightage by 15 basis points in August. One basis point is one hundredeth of a percentage point.

IIFL Alternative Research estimated the capital inflow in the company’s stock to hit about $439 million, whereas Edelweiss Alternative Research said that MSCI Weight up would lead to ~$600-700mn of inflow. Credit Suisse, which presented one of the most bullish prediction among the rest, expected rise in MSCI weight to attract at least US$1bn+ of inflows for the company’s stock.

Recent data by Telecom Regulatory Authority of India showed that Airtel added 3.6 million more customers in its service in October, taking its total wireless customer base to 330.3 million in the month.