Telecom Stocks Outlook For The Week – 15 to 19.01.2018

Telecom Stocks Outlook For The Week – 15 to 19.01.2018

             Equity Cash/Futures/Options Segment 

Earnings of Bharti Airtel Ltd and Reliance Jio Infocomm Ltd will be in focus next week, as investors will gauge the impact of a cut in domestic interconnect charge on their earnings for the December quarter. Interconnect usage charge was cut by 57% to 6 paise per minute effective Oct 1. This may lead to a sequential decline of 10% and 22%, respectively, in Bharti Airtel's and Idea Cellular Ltd's India wireless operating income for the December quarter. However, for new players such as Reliance Jio this will be beneficial. While Bharti Airtel will report its earnings on Thursday, Reliance Jio is expected to post its earnings along with parent Reliance Industries Ltd's results on Friday.
Sentiment may be subdued on Monday after the Telecom Regulatory Authority of India cut the
international termination fee, effective Feb 1, to 30 paise per minute from 53 paise per minute. International termination charge is what an international long distance operator pays a mobile service provider in the country on whose network the call terminates. The fees are paid in foreign currency.
The Cellular Operators Association of India has pegged the loss to Indian operators' revenue at about 20 bln rupees annually. Focus remains on market share gains, and we don't expect rapid price recovery. Telcos with strong networks and good execution remain better placed. On Tuesday, the Telecom Commission accepted recommendations made by the Telecom Regulatory Authority of India on easing caps on spectrum held by operators. In November, the regulator had suggested raising the overall cap on spectrum held by operators to 35% from the current limit of 25%, as well as removing the intra-band cap of 50% on a given band held by an operator in a service area. Instead, the regulator had suggested that there should only be a 50% cap on the combined spectrum holding in sub-1 GHz bands--700 MHz, 800 MHz and 900 Mhz. This is seen aiding companies which have opted for mergers and acquisitions in order to gain leverage through market share in an industry reeling under pricing pressure following the entry of Reliance Jio.

Source : Cogencis Information Services Ltd.

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