TELECOM STOCKS OUTLOOK FOR THE WEEK – 15 TO 19.09.2014
( www.rupeedesk.in )
Stocks of frontline telecom companies are likely to trade on company-specific
triggers
next week in the absence of broad market cues, with Bharti Airtel and Idea
Cellular
continuing to show positive bias.
On the back of recent news flow about Bharti Airtel selling another 3,500
towers in
Africa to Eaton Towers to reduce its debt, the company is expected to remain
positive in
the coming week. Though there is no sectoral trigger.
On Sep 8, Bharti Airtel announced that it had entered into a 10-year pact with
telecom
infrastructure company Eaton Towers to sell and lease back over 3,500 of its
telecom
towers in Africa. Bharti Airtel did not disclose the size of the deal. The
proceeds from the
deal were expected to reduce the current debt of the company.
Most of the funds will be used to de-lever, we understand current gross debt is
around
$12 bln or around $9 bln for Africa. So, any deleveraging is good, especially
as forex
remains volatile there is plenty of action in the home market and there will be
more
investments made in India - be that on spectrum or even on the existing
networks, so any
surplus financial capacity is good.
Though most of the stocks looked positive, Reliance Communication is likely to
trade
with a negative bias.
Markets will also keep a watch for major restructuring initiatives announced by
the
government for the sector.
Government has already announced decisions to merge BSNL and MTNL and revive
the
state-owned telecom firms in a time-bound manner. Industry will also closely
keep a tab
on the government's digital India plan, which aims to transform India into a
digitally
empowered society and knowledge economy.
