Telecom
Stocks Outlook for the week – 17 to 21.11.2014
( www.rupeedesk.in )
Stocks of frontline
telecom service providers are seen range bound to negative in
the week ahead, with
stocks of Reliance Communications and Idea Cellular
showing a negative trend.
Telecom stocks are going to exhibit mixed trends next
week.
Reliance Communications
will continue to remain negative. Only, Tata
Communications scrip is
expected to trade with a positive bias. Bharti Airtel is
expected to remain range
bound.
Stocks of Reliance
Communications, which did not fare well this week, are
expected to take cues
from Jul-Sep earnings reported post market hours
yesterday. The company
reported a consolidated net profit of 1.53 bln rupees for
Jul-Sep compared with
6.75 bln rupees year ago. The company, part of the
Reliance Anil Ambani
Group, posted Jul-Sep consolidated total income of 52.87
bln rupees.
Also, the government's
decision to go ahead with the decision to auction only
limited quantum of
spectrum that is available may also have a bearing on the
movement of telecom
scrips in the week ahead. Telecom Regulatory Authority of
India had recommended
that the auction should be conducted only when there
are enough spectrums. The
telecom operators, backed by TRAI, had argued that
the auction should not be
held till the government is able to find enough
spectrums.
However, despite the
growing demand from the industry to postpone spectrum
auctions till more
airwaves could be made available, the telecom department is
determined to hold the
process in February, as per schedule. "The outlook for
profitable private telcos
could turn negative should price-based competition
return in the voice
segment, which would narrow profitability. The sector outlook
could turn negative if
the Indian government auctions a smaller-than-expected
quantity of telecom
spectrum in 2015, which could lead to aggressive bidding by
incumbents whose licences
expire during 2015-2016," Fitch said in its recent
report.
Fitch Ratings believes
that the credit profiles of the top four Indian telecom
companies--Bharti Airtel
Ltd, Vodafone India, Idea Cellular Ltd and Reliance
Communications Ltd--will
remain intact in 2015. According to the ratings agency,
gradual rise in voice
tariffs and improving regulatory environment would
compensate for the
decline in realisation in data services as the entry of Reliance Industries' arm may
push data tariffs down by at least 20%
