Foreign investors dial into telecom stocks

Market participants say that a major structural shift is putting telecom stocks back on the investor radar

- Dipti Sharma

The telecom pack is back in the spotlight, drawing strong interest from foreign investors, with signs that domestic mutual funds may be catching on as well.

NSDL data show that out of the $2.32 billion poured in by foreign portfolio investors in May, about $1.88 billion went into telecom stocks, making for the biggest-ever monthly FPI inflow into the sector. It's also a steep jump from $523 million in April, signaling rising investor confidence in the space.

One of the main reasons for this influx of capital in the telecom sector could be Singtel selling its 1.2% stake in Bharti Airtel in a block deal in mid-May, on a private placement basis, to international and Indian institutional investors.

Market participants believe the sector is undergoing a major structural shift, which is putting telecom stocks back on the investor radar.

Average revenue per user (Arpu) has improved significantly post-Covid, said Krishna Appala, senior research analyst at Capitalmind Research. Arpu had dropped below ₹120 by 2018 amid intense price wars.