The government is all set to start the auction of 5G airwaves by July end. The airwaves will be auctioned for 20 years with no mandate to make upfront payments by the winners. The successful bidders will be required to pay annual instalments at the start of each year with an option to surrender the spectrum after 10 years.
The telecom department expects service providers to use the mid and high-band spectrum to roll out 5G technology-based services that will enable capacities and speed 10x of the current 4G services.
5G technology is supposed to add $ 450 billion to the Indian economy, the world’s second-largest telecom market by creating jobs, increasing the speed of digitisation, enhancing the ease of doing business and enabling better governance.
The following stocks are expected to gain from the roll-out of 5G technology in India:
Reliance Industries
Reliance Industries is the parent company of Jio, the telecom disruptor of India that pioneered the 4G services in the nation. With a net profit of ₹ 15,487 crores for the financial year 2022, Reliance Jio Platforms had a 23% share in the year-end net profit of ₹ 67,565 crores of Reliance Industries.
Morgan Stanley has given an ‘overweight’ call on RIL with a target price of ₹ 3,253 per share, an upside of 25% from Wednesday’s closing price of ₹ 2,596.
Bharti Airtel
Also known as Airtel, it is an Indian multinational telecommunications company operating in 18 countries.
The company has stood strong gaining revenue market share slowly. Revenue Market Share or RMS means the revenue of a company to the total revenue of the telecommunication industry. Its RMS at 35.5% is second in line with Jio’s 40.3%.
Airtel has conducted successful 5G trials across different states and is ready for 5G. It will work with leading global companies such as CISCO, Ericsson, Google Cloud, TCS and AWS to test 5G-based solutions.
JM Financial sees a 38% upside over Wednesday’s closing price of ₹ 681 with a target price of ₹ 940 per share for a time period of one year.
HFCL
Himachal Futuristic Communications Ltd. is a mid-cap Indian telecom equipment provider which is building a portfolio of 5G products including 5G Radio Access Network (RAN) and 5G transport equipment, both for Indian and foreign markets.
The telecommunications equipment providers will play an important role in the 5G rollout by creating the required infrastructure for digital transformation.
The shares of HFCL Ltd. which closed at ₹ 61 per share on Wednesday have delivered a multi-bagger return of 377% over the last two years.
Tejas Networks
It is a broadband, data networking and optical products company that designs, develops and sells its products to internet service providers, telecom service providers, utilities, cyber-security and government entities. Last year, Tata Group acquired a 43.35% stake in the company leading the salt-to-software conglomerate’s entry into the telecom equipment market.
This year, Tejas Networks acquired a majority stake in Saankhya Labs to expand its wireless product offerings as the industry is at the cusp of the 5G revolution.
Sanjay Naya, CEO and MD of the company commented, “This acquisition shows our continued commitment to expanding our wireless product offerings to address the growing market opportunity. Saankhya’s products would complement our existing 4G/5G Radio Access Network (RAN) products and position us well for the emerging opportunities in the O-RAN and 5G broadcast space.”
The shares of the company have climbed a whopping 155% in one year. The stock closed at ₹ 450 per share on Wednesday.
Written By – Vikalp Mishra
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