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Telecom crisis: Mutual funds quarantine Vodafone Idea but eye opportunities in Bharti Airtel

Kshitij Bhargava

Although Vodafone Idea share price has gained more than 20 per cent since the last week of February, mutual funds do not seem to be convinced by the rally in the struggling telecom player's share price. According to the data compiled by Prime Database, among 18 mutual funds having Vodafone Idea as a part of their portfolio, only two bought more than Rs 1 crore worth Vodafone Idea shares on an on-month basis. While Nippon India Mutual Fund was the biggest buyer of Vodafone Idea; DSP Mutual fund was the biggest seller of the scrip on-month basis.

Washing their hands off Vodafone Idea shares, DSP Mutual Fund, Aditya Birla Mutual Fund, Axis Mutual Fund and LIC Mutual fund reduced their exposure to close to zero. DSP Mutual Fund sold 10.5 crore shares of Vodafone Idea. Franklin Templeton, the only fund to have over 100 crore Vodafone Idea shares, sold more than 4.5 crore shares on-month basis. Kotak Mahindra Bank was the third largest seller with more than 3 crore shares sold. Amid all this, JM Financial Mutual Fund bought close to 40 lakh shares of Vodafone Idea, and BOI AXA Mutual Fund purchased more than 19 lakh shares, both had no exposure to the Vodafone Idea till January 2020. Even though, reports suggest, the Department of Telecommunications might go easy on the crisis-hit telecom operators, Vodafone Idea is yet to get any indication of relief.

On the other hand, the other telecom player grappling under Adjusted Gross Revenue (AGR) dues, Bharti Airtel was the second most bought by large cap funds by market value, multi-cap funds too showed avid interest when it came to Bharti Airtel, said a report by Emkay Global Financial Services.

Among the 35 mutual funds tracked by Prime Database, the majority bought Bharti Airtel. Nippon India Mutual Fund was the biggest buyer of Bharti Airtel, adding close to 30 lakh shares in February 2020. It was followed by Aditya Birla Mutual Fund adding 23 lakh shares and UTI Mutual Funds purchasing 20 lakh Bharti Airtel shares. Among the biggest sellers of Bharti Airtel were ICICI Prudential Mutual Fund getting rid of close to 80 lakh shares; followed by Mirae Asset Mutual Fund selling more than 10 lakh shares.

Telecom operators have paid Rs 25,000 crore of the Rs 1.69 lakh crore AGR dues. Vodafone Group, Nick Read had repeatedly affirmed that the company might have to shut its doors if there is no government bail-out of the sector.