Best Telecom Stocks in India

10 April 2024
8 min read
Best Telecom Stocks in India
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(The stocks mentioned in the blog are as per Market Capitalization)

The telecommunications sector in India is experiencing significant growth due to the introduction of 5G technology, the expansion of digital platforms and the increasing internet penetration.

With a current valuation of around ₹3,000 billion, the sector is expected to witness robust growth at a CAGR of approximately 7% to 9% by FY24. The nation's emphasis on advancing and embracing cutting-edge technologies in areas such as 5G or 6G services and Satellite Communication (SatCom) is further driving the sector's advancement. 

Telecom Industry in India - A Brief Overview

India's telecom industry ranks as the second largest globally, boasting a subscriber base of 1.079 billion as of December 2023, encompassing both wireless and wireline subscribers. The country's overall teledensity stands at 85.23%, with rural areas having a teledensity of 58.56% and urban areas at 133.76%.

India's telecommunication industry comprises several sub-sectors, including infrastructure, equipment, white space spectrum, Mobile Virtual Network Operators (MVNOs), 5G, telephone service providers and broadband. The telecom sector in India has made rapid progress due to government policies. These policies make it easy for companies to enter the market and provide fair rules for offering telecom services to Indian consumers at reasonable prices.

According to GSMA, India is expected to become the world's 2nd-largest market for smartphones in the next 2-3 years, boasting nearly 1 billion active devices. By then, it is anticipated that India will have around 920 million individual mobile users, with 88 million of them using 5G technology. Moreover, India aims to manufacture mobile phones worth $126 billion by the fiscal year 2025-26. The introduction of 5G technology is projected to contribute approximately $450 billion to the Indian economy between 2023 and 2040.

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Top Telecom Stocks in India in 2024 as per Market Capitalisation

The following table gives the best telecom stocks in India in 2024 as per market capitalisation:

S.No.

Telecom Stocks in India (as per market capitalisation)

1.

Bharti Airtel

2.

Indus Towers

3.

Vodafone Idea

4.

Tata Communications

5.

ITI

*Our stock selection criteria for top stocks based on Market Capitalisation are mentioned at the bottom of this blog.

Overview of Best Telecom Stocks in India as per Market Capitalisation

Here is a detailed overview of the best telecommunication stocks sorted as per market capitalisation in 2024:

1) Bharti Airtel

Headquartered in New Delhi, Bharti Airtel Limited is a prominent global telecommunications company. Known for its reliability, it offers ICT services across the Middle East, USA, Asia-Pacific, Africa,  Europe and SAARC regions.

Airtel Telecommunications ranks among the top 3 mobile service providers worldwide. The company operates through 4 main segments - home services, mobile services, digital TV services, and Airtel business. 

In the home service segment, it provides fixed-line telephone and broadband services to households in 700 cities nationwide. Under the mobile services segment, it delivers voice and data telecom services using wireless technology like 2G, 3G, or 4G across India.

The Digital TV Services segment provides standard as well as HD digital TV services, featuring 3D capabilities and Dolby surround sound. It includes a total of 635 channels, including 80 HD channels, 5 international channels and 3 interactive services. Airtel's business segment focuses on offering ICT services to around 1,200 global enterprises,  2,000 large businesses and 1 million medium and small businesses throughout India.

2) Indus Towers

Formed by merging Bharti Infratel Limited and Indus Towers, Indus Towers Limited is an Indian company that provides telecom infrastructure services.

The company is engaged in installing, owning and managing telecom towers and structures for different mobile operators. Its services include providing towers, power supply, space and tower operations centres. The company also provides solutions for smart cities and environmentally friendly technology. 

Indus Towers installs the physical infrastructure needed to support its customers' active equipment, including transmission links, base transceiver stations and microwave antennas.

The company powers its towers using electricity from the grid or diesel generators. Currently, Indus Towers owns and operates more than 2,11,775 towers with 3,60,679 co-locations.

3) Vodafone Idea

Headquartered in Mumbai, Vodafone Idea Limited was formed through a partnership between the Vodafone Group and the Aditya Birla Group. The company offers voice and data services across the country on 2G, 3G and 4G platforms.

Vodafone Idea caters to a wide range of clients, including global and Indian corporations, public sector entities, small and medium enterprises, and startups through its business services division. 

The company's services include broadband services, voice services, and various digital content solutions. Additionally, Vodafone Idea provides entertainment services such as sports content and interactive voice response-based games, as well as utility services like doctor-on-call facilities and missed call alerts.

Vodafone Idea Limited has subsidiaries like Vodafone Idea Business Services Limited and Vodafone Idea Manpower Services Limited.

4) Tata Communications

Tata Communications Limited, based in Mumbai, offers a wide range of voice and data transmission services.

The company leads the way in advancing intelligence through the Internet of Things (IoT), cloud, collaboration, mobility, security and network services.  This drive is powered by its solutions-focused approach, established managed service capabilities, and state-of-the-art infrastructure. 

Around 30% of the world's internet routes are managed by Tata Communications, linking businesses to 80% of the world's major cloud providers and serving 4 out of 5 mobile subscribers.

The company's capabilities originate from its global network, which includes the world's largest privately owned subsea fibre backbone and a Tier-1 IP network with connectivity to over 190 countries and territories. Tata Communications focuses on helping industry leaders in the changing world of communications. The company does this by providing safe and connected digital experiences. Tata Communications operates across the Middle East, the Americas, Europe and Asia-Pacific regions. 

5) ITI

Incorporated as a departmental factory in 1948, ITI Limited specialises in telecommunications technology. The company offers a wide range of products, including Managed Leased Line Network (MLLN), SMPS, Wi-Fi Access Point, Radio Modem, Stand Alone Signalling Transfer Point (SSTP), Gigabit Passive Optical Network (GPON) products and Set Top Box.

Additionally, its passive infrastructure products include optical fibre cable, antenna, HDPE duct and diversified products like solar panels, smart cards, smart energy metres and mini personal computers.

Furthermore, ITI operates a dedicated Network System Unit for executing turnkey projects involving installing and commissioning telecommunication networks. The company has 6 manufacturing facilities situated across India in Bengaluru (Karnataka), Palakkad (Kerala), Naini (Uttar Pradesh), Mankapur (Uttar Pradesh), Rae Bareli (Uttar Pradesh) and Srinagar (Jammu and Kashmir), with a network system unit based in Bengaluru.

Factors to Consider Before Investing in Telecom Stocks in India

Investing in the top telecom stocks requires careful attention to several key factors for making well-informed decisions. Here are some of the factors that you must consider before buying these stocks:

  • Regulatory Environment

The telecommunications sector, governed by the Telecommunications Act of 2023, is subject to certain strict regulations. Any forthcoming changes within the Act could significantly affect a company's performance. You must stay informed about regulatory developments and their potential effects on investments.

  • Industry Trends

Stay updated on industry trends, including technology advancements, regulatory shifts and changing consumer behaviours. With generative AI launched into the sector, costs and risks associated with data conditioning and governance will greatly influence the telecom sector's performance. T

herefore, you must choose the companies prioritising data quality and security. 

  • Capital Expenditures

Telecom companies require significant capital investments for network maintenance and upgrades. You must evaluate a company’s capital expenditure relative to its revenue to gauge its commitment to network enhancement. You should also be mindful of companies' changing fortunes and discrepancies between revenue and market capitalization.

  • Competition

The telecom industry is highly competitive. You must evaluate the company's position relative to its competitors, considering factors like market share, pricing strategies, and service quality.

  • Financial Performance

Thoroughly assess the financial health of the telecom company, analysing metrics such as revenue growth, profitability and debt levels. Key financial ratios like the price-to-earnings ratio and return on equity offer valuable insights into valuation and profitability.

Should You Invest in Telecom Stocks?

Investing in telecom stocks can offer exposure to a vital sector essential for modern connectivity and communication. However, it is essential to understand the risks involved before making investment decisions. 

Regulatory risk is a primary concern, as telecommunication companies operate in heavily regulated environments where changes in regulations can impact profitability and growth. You should also think about the technology risk associated with companies that depend on technology becoming outdated or disturbed by new inventions.

Finally, competition risk is ever-present, with telecommunication companies facing intense competition from both within and outside their industry. New entrants and evolving customer preferences pose challenges that can affect market share and profitability. Therefore, before investing in the telecom sector stocks, carefully evaluate these risks and consider the ability of companies to navigate regulatory changes to sustain profitability.

The Bottom Line

Investing in telecom stocks can be rewarding, but you should do thorough research and understand the industry dynamics and associated risks.

By carefully weighing the factors and your financial goals, you can make informed decisions aligning with your investment objectives. Remember, a well-informed approach is key to maximising returns and achieving long-term success in telecom stock investments.

*Stock Selection Criteria for Top Stocks Based on Market Capitalisation

These stocks are chosen based on their market capitalization, which represents the total value of a company's outstanding shares. The selection is arranged in descending order, placing the largest companies first and the smaller ones later. This helps prioritize stocks based on their market size. 

It is important to note that market capitalization in no way guarantees a company’s performance or the returns from its stocks. However, it can be used as a criterion for shortlisting companies from within a sector. Investors should recognize that other factors, such as financial health, management efficiency, and market trends, play crucial roles in determining the actual success of an investment. 

This stock selection should not be construed as investment advice/recommendations/offer/solicitation of an offer to buy/sell any securities by Groww Invest Tech Pvt. Ltd. (formerly known as Nextbillion Technology Pvt. Ltd.).

Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory.

To read the RA disclaimer, please click here
Research Analyst - Aakash Baid

Disclaimer

The stocks mentioned in this article are not recommendations. Please conduct your own research and due diligence before investing. Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please read the Risk Disclosure documents carefully before investing in Equity Shares, Derivatives, Mutual fund, and/or other instruments traded on the Stock Exchanges. As investments are subject to market risks and price fluctuation risk, there is no assurance or guarantee that the investment objectives shall be achieved. Groww Invest Tech Pvt. Ltd. (Formerly known as Nextbillion Technology Pvt. Ltd) Ltd. do not guarantee any assured returns on any investments. Past performance of securities/instruments is not indicative of their future performance.
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