Bharti Tele flagged off trading on Friday with a solid spurt as the GoM on Thursday recommended an increase in FDI for the telecom sector to 74%, just ahead of the Union Budget.

The recommendation is now likely to be incorporated in the Union Budget slated for today. This reckoning, itself, spurred the scrip of the private sector telecom services provider onward by 7.72% to Rs 30 by 10:00 IST. Volumes touched 19,410 shares by then.

Late evening Thursday, the Group of Ministers on foreign direct investment, headed by finance minister Jaswant Singh, cleared a proposal to raise foreign direct investment in the telecom sector to 74% from 49%.

The overall foreign holding in Bharti currently is 46.94%, while the company has a ceiling of 47% for FIIs under the portfolio investment scheme. As on 31 December 2003, promoters held 46.56% in BTL, while the public and institutions held 2.48% and 2.32%, respectively.

Expectations are also running high about what prescriptions will come from the forthcoming Union Budget 2003-04, scheduled today. The telecom sector expects - the extension of section 80(I)A benefits (backward area benefits) to telecom services operations commenced after 31 March 2003, removal of the current 14.4% duty levied on mobile handsets and removal of mobile ownership as one of the six eligibility criteria for mandatory filing of income tax returns. In addition, the industry has been seeking a lowering of revenue share/license fee from the current 8-15% to 6-7% of adjusted gross revenues for telephony services.

Analysts feel that, overall, the budget should prove beneficial for the telecom sector, especially for the mobile telephony segment. The BTL stock will be a major gainer if the extension of section 80(I)A is promulgamated, as BTL is the only listed company that is eligible for 80(I)A benefits. However, some feel that this may not materialise in the current budget.

For the third quarter ended 31 December 2002, Bharti Tele-Ventures reported a net profit of Rs 6.52 crore compared to a net loss of Rs 7.89 crore in the corresponding period of the previous year. The total income increase to Rs 12.76 crore from Rs 0.35 crore in DQ 2001.