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Telecom Stocks Outlook for the week – 10 to 14.04.2017

Telecom Stocks Outlook for the week – 10 to 14.04.2017


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Telecom Stocks Outlook for the week – 10 to 14.04.2017
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Stocks of most telecom companies are expected to move in a range-bound manner next week, with analysts expecting Tata Communications Ltd's stock to witness consolidation. In what analysts are terming as the likely end of the era of free offers, the Telecom Regulatory Authority of India late on Thursday asked Reliance Jio Infocomm Ltd to withdraw the complimentary benefits of its Summer Surprise offer. Under the offer, the company had announced that 'Prime' members would get complimentary services for the first three months on a recharge of at least 303 rupees and the paid tariff plan would be applicable only from July. Rolling back of the offer would only result in 2-3% lower subscriber base for Reliance Jio against the projected base if the company had been allowed to extend the benefits till Apr 15. The Reliance Industries Ltd subsidiary had announced Prime membership for a subscriber which entails a one-time subscription charge of 99 rupees a year. Now, the industry will focus on average revenue per user and how much revenue can companies generate. Most operators in the telecom sector are facing stiff pricing pressure after RJio's entry and have offered similarly-priced plans. In a move seen as a response to the tariff war, Bharti Airtel Ltd, Idea Cellular Ltd, Mahanagar Telephone Nigam Ltd, Reliance Communications Ltd, and Bharat Sanchar Nigam Ltd have announced attractive offers to compete with RJio. In a recent report, ratings agency ICRA said the ongoing pricing pressure triggered by the entry of RJio, stress on operating metrics in the sector, and rising debt levels were seen weighing down on the financial performance of telecom companies. Financial results of Bharti Airtel and Idea Cellular for the March quarter are likely to be hit. Rising competition in the sector has also led to consolidation. Bharti Airtel has announced two separate acquisitions of Tikona Digital Networks Pvt Ltd and the Indian arm of Norway's Telenor ASA. Vodafone India Ltd and Idea Cellular have also announced a merger, which is pending regulatory approvals.

Source : Cogencis Information Services Ltd.