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Telecom Stocks Outlook For The Week – 30.01.2017 To 03.02.2017

Telecom Stocks Outlook For The Week – 30.01.2017 To 03.02.2017


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Telecom Stocks Outlook For The Week – 30.01.2017 To 03.02.2017
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Stocks of telecommunication companies are seen trading in a range next week and activities are likely to be stock specific. While shares of Bharti Airtel, Idea Cellular, and Tata Communications are seen rising, those of Reliance Communications are seen consolidating at the current levels. We expect a faster-than-expected consolidation in the telecom sector leading to fewer operators to weather the storm kicked off by the entry of Reliance Jio Infocomm Ltd. Reliance Jio, the telecom arm of Reliance Industries Ltd, shook the industry by offering multiple free data services as part of its inaugural offer in September, leading to concerns over erosion in market share of incumbent operators and fall in average revenue. Bharti Airtel Ltd, country's largest telecom service provider in terms of subscriber base, posted a 65.5% sequential fall in its consolidated net profit in Oct-Dec to 5.04 bln rupees that was nearly half of the estimated 10.1 bln rupees Mergers and acquisitions in the next 12-15 months will lead to fewer operators, and thereby reduce competition, the company said on Wednesday. Consolidation in the sector will be faster than expected as there is immense pressure on profitability. After Reliance Jio extended its inaugural free offer until Mar 31, Bharti Airtel, Vodafone India Ltd, and Idea Cellular Ltd also announced free data offers for fourth-generation subscribers to retain their user base. The key thing to look out for is what Reliance Jio expects from its investments. We expect other telecom companies to be in cash protection mode and see capital expenditure being tight right now.