Telecom Stocks Outlook for the week – 07 to 11.Jul.2014
Stocks of major telecom companies are likely to pick cues from the General Budget, which
will be tabled on Jul 10, to chart their movement next week. We expect the stocks of major
telecom firms such as Bharti Airtel, Idea Cellular and Reliance Communications to remain
range-bound. Reliance Communications, the only telecom stock that failed to exhibit a
positive change from the week ending Jun 27 is likely to gain. The Budget may give some
impetus to the telecom companies in the long term.
In a pre-budget note, Dun & Bradstreet said it expects rationalisation of taxes and levies in
the sector, which currently amount to nearly 30% of the revenues of telecom companies as
against 5% in other countries in Asia-Pacific. Besides, an early finalisation of spectrum
trading guidelines would augur well for the sector.
If the Budget grants infrastructure sector status and tax holiday, especially for tower
companies, then there would be a 15-25% earnings upgrade for tower companies like Bharti
Infratel. We expect some moderation in q-o-q (quarter on quarter) voice volume growth.
Bharti Africa and Bharti Infratel will likely have a subdued quarter.
Stocks of major telecom companies are likely to pick cues from the General Budget, which
will be tabled on Jul 10, to chart their movement next week. We expect the stocks of major
telecom firms such as Bharti Airtel, Idea Cellular and Reliance Communications to remain
range-bound. Reliance Communications, the only telecom stock that failed to exhibit a
positive change from the week ending Jun 27 is likely to gain. The Budget may give some
impetus to the telecom companies in the long term.
In a pre-budget note, Dun & Bradstreet said it expects rationalisation of taxes and levies in
the sector, which currently amount to nearly 30% of the revenues of telecom companies as
against 5% in other countries in Asia-Pacific. Besides, an early finalisation of spectrum
trading guidelines would augur well for the sector.
If the Budget grants infrastructure sector status and tax holiday, especially for tower
companies, then there would be a 15-25% earnings upgrade for tower companies like Bharti
Infratel. We expect some moderation in q-o-q (quarter on quarter) voice volume growth.
Bharti Africa and Bharti Infratel will likely have a subdued quarter.
