Telecom Stocks Outlook for the week – 29.05.2017 to 02.06.2017

Telecom Stocks Outlook for the week – 29.05.2017 to 02.06.2017

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Telecom Stocks Outlook for the week – 29.05.2017 to 02.06.2017
  ( www.rupeedesk.in )

Stocks of most telecommunication companies are likely to recover next week as investors may buy the stocks that have witnessed a weak spell over the past month. Fundamental analysts remain negative on the sector and expect Reliance Jio Infocomm Ltd's aggressive tariff plans to continue to put pressure on margins and revenue of other operators. Bharti Airtel Ltd's consolidated net profit for the March quarter fell 25.9% on quarter to 3.7 bln rupees, while Idea Cellular Ltd's consolidated revenue, including other operating income, fell 6.2% on quarter to 81.26 bln rupees. Expecting intense tariff competition over the next several quarters among operators, Moody's Investors Service on Tuesday cut Bharti Airtel's rating outlook to negative from stable. It affirmed the company's rating at Baa3. Taking cognizance of the pressure on the sector, an inter-ministerial panel has been set up by the government to study the financial health of the sector and recommend steps for resolution. It has met once so far. To ease pressure on companies, the Cellular Operators Association of India has sought from the panel reduction of spectrum usage charge to 1% of adjusted gross revenue, and reduction in licence fee to 3% of adjusted gross revenue from 8%. Analysts believe a goods and services tax rate of 18% is likely to bleed companies further. Rising competition after the entry of Reliance Jio 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 and Idea Cellular have also announced a merger, which is pending regulatory approvals. Stocks of Reliance Communication could recover.

Source : Cogencis Information Services Ltd.

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