Telecom Stocks Outlook For The Week – 11 To 15.12.2017
The Movement in telecommunication sector is likely to be stock-specific next week amid severe stress on companies' financials. Bharti Airtel Ltd is the top pick in the sector because, due to its position as the market leader, the company seems to be best placed to weather the pricing storm caused by Reliance Jio Infocomm Ltd. The market leader in terms of both subscriber base and revenue is expected to benefit the most from the ongoing consolidation in the industry. Last week, as report, the company is expected to be the biggest beneficiary when 100 mln subscribers of Tata Teleservices, Aircel and Reliance Communications are up for grabs in the next two or three quarters. The company has already announced the acquisition of Tata group's telecom services on a cash-free, debt-free basis, apart from domestic operations of Telenor India and Tikona Digital Networks.
Bharti Airtel is expected to lose its market leader position after Idea Cellular Ltd and Vodafone India Ltd complete their merger next year. However, Chairman Sunil Mittal last week said he hopes the company will reclaim the top spot by March 2019. RJio had disrupted the sector after it launched its services in September last year. After providing free services for six months, the company started paid services at extremely cheap tariff, which led to a pricing war in the sector and put severe pressure on other companies' earnings. Earnings for Oct-Dec may continue to be under pressure as the Telecom Regulatory Authority of India cut interconnects usage charges to 6 paise from 14 paise, effective Oct 1. Interconnect usage charges are paid by the operator from whose network a call is made to the network the call lands on. About 4% of market leader Bharti Airtel's operating income comes from net revenue from interconnect usage charges. A positive for the sector could be the likely acceptance by Department of Telecommunications of TRAI's recommendations last week to consider raising the overall cap on spectrum held by operators. A Cabinet nod for measures approved by the
Telecom Commission--the highest decision-making body in the telecom department--to ease financial stress in the sector, is also awaited
Source : Cogencis Information Services Ltd.
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The Movement in telecommunication sector is likely to be stock-specific next week amid severe stress on companies' financials. Bharti Airtel Ltd is the top pick in the sector because, due to its position as the market leader, the company seems to be best placed to weather the pricing storm caused by Reliance Jio Infocomm Ltd. The market leader in terms of both subscriber base and revenue is expected to benefit the most from the ongoing consolidation in the industry. Last week, as report, the company is expected to be the biggest beneficiary when 100 mln subscribers of Tata Teleservices, Aircel and Reliance Communications are up for grabs in the next two or three quarters. The company has already announced the acquisition of Tata group's telecom services on a cash-free, debt-free basis, apart from domestic operations of Telenor India and Tikona Digital Networks.
Bharti Airtel is expected to lose its market leader position after Idea Cellular Ltd and Vodafone India Ltd complete their merger next year. However, Chairman Sunil Mittal last week said he hopes the company will reclaim the top spot by March 2019. RJio had disrupted the sector after it launched its services in September last year. After providing free services for six months, the company started paid services at extremely cheap tariff, which led to a pricing war in the sector and put severe pressure on other companies' earnings. Earnings for Oct-Dec may continue to be under pressure as the Telecom Regulatory Authority of India cut interconnects usage charges to 6 paise from 14 paise, effective Oct 1. Interconnect usage charges are paid by the operator from whose network a call is made to the network the call lands on. About 4% of market leader Bharti Airtel's operating income comes from net revenue from interconnect usage charges. A positive for the sector could be the likely acceptance by Department of Telecommunications of TRAI's recommendations last week to consider raising the overall cap on spectrum held by operators. A Cabinet nod for measures approved by the
Telecom Commission--the highest decision-making body in the telecom department--to ease financial stress in the sector, is also awaited
Source : Cogencis Information Services Ltd.
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