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Telecom stocks are expected to ride out the volatility in the broad market and trade with a positive bias next week, with the sector likely to get reprieve from high spectrum charges. In the open house discussion held by the Telecom Regulatory Authority of India held on Aug 26, the regulator has indicated that it is in favour of setting a lower base price for the upcoming spectrum auction. The regulator's recommendations on this are expected in the next few weeks. Despite minor opposition from some quarters (primarily CDMA operators and consumer groups), we believe TRAI is inclined towards a significant reduction in reserve price. A reasonable spectrum reserve price as demanded by the industry is expected to lower the strain on the already highly leveraged balance sheet of the companies. Among individual stocks, Idea Cellular and Reliance Communications are expected to gain, while Bharti Airtel may see some selling pressure. Bharti Airtel next week is expected to underperform but the counter is not expected to see sustained heavy selling.
Telecom stocks are expected to ride out the volatility in the broad market and trade with a positive bias next week, with the sector likely to get reprieve from high spectrum charges. In the open house discussion held by the Telecom Regulatory Authority of India held on Aug 26, the regulator has indicated that it is in favour of setting a lower base price for the upcoming spectrum auction. The regulator's recommendations on this are expected in the next few weeks. Despite minor opposition from some quarters (primarily CDMA operators and consumer groups), we believe TRAI is inclined towards a significant reduction in reserve price. A reasonable spectrum reserve price as demanded by the industry is expected to lower the strain on the already highly leveraged balance sheet of the companies. Among individual stocks, Idea Cellular and Reliance Communications are expected to gain, while Bharti Airtel may see some selling pressure. Bharti Airtel next week is expected to underperform but the counter is not expected to see sustained heavy selling.
