Telecom Stocks Outlook for the week – 25 to 29.05.2015

Telecom Stocks Outlook for the week – 25 to 29.05.2015

 Seen down next week on inherent weakness

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Stocks of major telecom companies are seen down next week on continued weakness in the sector. There is no positive indicator in telecom sectors, the stocks are seen negative only next week.

 The Street will also watch the stocks of Anil Ambani-led Reliance Communications Ltd's stocks, which will report its Jan-Mar earnings on Friday. Analyst sees Reliance Communications reporting a 1% sequential rise in its consolidated earnings before interest, taxes, depreciation and amortisation to 18.7 bln rupees, despite a 2% quarter-on-quarter fall in the company's revenues. For stocks of India's largest mobile services operator Bharti Airtel, negative trading in the stock next week.

Telecom Stocks Outlook for the week – 11 to 15.05.2015

Telecom Stocks Outlook for the week – 11 to 15.05.2015

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In the absence of any sector specific triggers, shares of telecom companies are expected

to exhibit mixed trends next week, with market leader Bharti Airtel remaining positive,

and Idea Cellular showing a negative bias.

The outlook for the telecom stocks is mixed. Bharti Airtel is expected to gain further and

remain positive next week. Another, sector major Idea Cellular is expected to remain

weak. Though there are no fundamental reasons driving scrips next week, there could be some impact of the recent decision by telecom companies to cut roaming charges. Leading

telecom operators including Bharti Airtel, Idea Cellular, Vodafone and Reliance

Communications, today slashed their voice and SMS tariff on national roaming by 20%

to up to 75% effective from this month.

The reduction in roaming tariffs announced by the telecom operators is in line with recent

guideline by the Telecom Regulatory Authority of India. On Apr 9, TRAI cut the

maximum charges that can be imposed by telecom operators on voice calls and short

message services while subscribers are on national roaming.

Telecom Stocks Outlook for the Week – 06 to 10.04.2015

Telecom Stocks Outlook for the Week – 06 to 10.04.2015

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Stocks of major telecom companies are seen trading firm next week on sustained momentum gained during this truncated week, with the exception of Reliance Communications Ltd, which is expected to under-perform its peers.

The stocks have shown some positivity during last week, and that is likely to continue next week with Idea Cellular topping the sector. Idea Cellular managed to retain its spectrum holding in the just ended auctions and also bought some airwave in new circles for a total 303.06 bln rupees.

Telecom Stocks Outlook for the week - 23 to 27.03.2015

Telecom Stocks Outlook for the week - 23 to 27.03.2015

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Stocks of telecom majors, which have been fundamentally frail for the past few months, are

expected to be under pressure next week as well from the weakness in the broader indices.

The sector has been under pressure for a while, and the markets being at a crucial juncture, the telecom shares will expect to show weakness in the next week as well.

We expect the Street could take into account the debt levels of each of the companies once a

final figure of the operators' bids in the ongoing spectrum auction comes out. At the end of

yesterday’s bidding, the government has received commitments worth 1.05 trln rupees from the bidders. The shares of Idea Cellular could be preferred for trading over those of Bharti Airtel. The shares of the Aditya Birla group company are seen trading sideways next week.

Telecom Stocks Outlook for the week – 14 to 18.07.2014

Telecom Stocks Outlook for the week – 14 to 18.07.2014
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Stocks of major telecom companies are likely to remain range bound next week, though

some firms such as Reliance Communications may remain bearish. Stocks of major

telecom firms such as Bharti Airtel and Idea Cellular to remain range bound.

Fundamentally, we think the street is underestimating data capex, and current

expectations already factor in a voice price uptick. Stay cautious. However, the stocks

can get some impetus from the Budget announcements.

The Budget provides growth opportunities to telecom sector to provide enabling

infrastructure. Modernisation of cities and providing high speed connectivity to build

smart cities will need roll out of new efficient technologies such as 4G and optic fibre

deployment. Mobile banking and the vast business correspondent model of telecom 

operators will help in fulfilling the social objective of financial inclusion.

Telecom stocks Outlook for the week – 30.06.2014 to 04.07.2014

Telecom stocks Outlook for the week – 30.06.2014 to 04.07.2014
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Telecom companies are likely to follow the broad markets next week with no sectorspecific

impetus in the offing. Telecom companies are likely to be in line with the broad

markets in absence of any sector specific news or trigger. However, some telecom

companies -- Bharti Airtel, Idea Cellular and Reliance Communications -- are likely to

hold on to their last week's positions.

Overall, we remain optimistic on Bharti as it has fortified spectrum holdings and

mitigated renewal risk to a large extent; although impending launch of Ril Jio (Reliance

Jio) and its data strategy remain the key concern, current valuations adequately factor

such risk and we retain buy on both Bharti and Idea. We expect to be tabled on Jul 10 is,

may give some impetus to the telecom companies in the long term.

On Jun 23, Bharti Airtel signed a definitive agreement with Loop Mobile to acquire the

latter's operations in Mumbai. On Jun 24, Reliance Communications raised 61 bln rupees

via share sale to institutions and a preferential issue of warrants to promoters. Both had

been factored in by the market.

Telecom Stocks Outlook for the week – 23 to 27.06.2014

Telecom Stocks Outlook for the week – 23 to 27.06.2014

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In absence of specific triggers for the sector, telecom companies are likely track the broad

markets in their movement next week, However, few stocks are seen gaining next week

as the telecom ministry, reportedly, has sought additional funds of 69.97 bln rupees in the

budget for various projects that are to be rolled out during the current financial year.

Telecom Minister Ravi Shankar Prasad is learnt to have approached Finance Minister

Arun Jaitley for additional funds to carry out projects committed under the Universal

Services Obligation Fund scheme. According to telecom companies, Bharti Airtel is seen

gaining the most, followed by Idea Cellular and Reliance Communications. Telecom

stocks look strong for the next few weeks as the robust subscriber addition continues this

month also.

While the current market stability continues to bode well for incumbents, R-Jio's launch

remains a key event risk to watch out for. Given that R-Jio is planning to target ruralareas too, aggression in the form of pricing or subsidies can't be ruled out-however, based

on today's speech, material impact on incumbents, if any, is likely to kick in during

FY16F or beyond. We would continue to monitor these developments.

Telecom Stocks Outlook for the week – 16 to 20.06.2014

Telecom Stocks Outlook for the week – 16 to 20.06.2014
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Major telecom stocks are expected to have a good run next week with the government

indicating speeding up of policy decisions in the sector. Structurally Indian telcos are

looking relatively appealing versus many other regional telcos at the moment. For a

change, we have pretty much every telco singing the same tune on increasing prices

and being rational on competition, and then there is also hope that the regulatory

environment can improve as well. This is all good and stocks can re-rate further.

Reliance Communications is likely to gain because of its decision to expand 3G network

across the country. Bharti Airtel and Idea Cellular are expected to remain range bound.

Reliance Communications will expand 3G services to five more circles, taking its 3G

services footprint to 18 circles. The indication by the new government to allow spectrum

sharing is likely to give positive impetus to the sector. However, we feel that the

approval for full number portability by the Telecom Commission is likely to be a

dampener, as only larger telecom operators have benefitted from it. The Telecom

Commission yesterday gave in-principle approval for full mobile number portability.

Telecom Stocks Outlook for the week – 09 to 13.Jun.2014

Telecom Stocks Outlook for the week – 09 to 13.Jun.2014
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Major telecom stocks are expected to consolidate their gains next week and trade with a

positive bias. Broad market is also expected to trade with a bullish bias next week after it

touched new lifetime highs yesterday, with the National Stock Exchange's 50-stock Nifty

ending at a record closing level of 7583.40, up 109.30 points or 1.5%, after hitting a

lifetime high of 7592.70 points intraday.

Trend for Idea Cellular is seen bullish next week, after a successful Qualified Institutional

Placement by the company, which was subscribed 1.5 times, with the company raising 30

bln rupees, according to reports. The stock is seen gaining as much as 145 rupees, with

the potential of reaching further highs.

Telecom Stocks Outlook for the week – 26 to 30.05.2014

Telecom Stocks Outlook for the week – 26 to 30.05.2014

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Telecom stocks are expected to trade in the green next week as the broad

market is seen scaling new highs with the National Stock Exchange's 50-stock Nifty

likely to surpass the 7500 mark. Yesterday, Nifty ended at a record closing level of

7367.10, up 90.70 points or 1.2% from Thursday.

With the equity market reaching new highs aided by inflows from foreign institutional

investors, the Indian rupee has also strengthened against the US dollar. So far in May, the

rupee has appreciated 3.06% against the dollar. Yesterday, the rupee ended at 58.52

against the dollar. The strengthening of the rupee will provide cushion to the balance

sheets of telecom companies, some of which have significant dollar debt exposure.

The telecom sector is likely to take a breather with appreciation of rupee as all the three

listed companies, especially Bharti and RCOM (Reliance Communications) have huge

foreign debt. As a result, a strong local currency may lead to lower interest and

installment outgo for this company. With this, we remain positive on the sector for near

to medium term.

Telecom Stocks Outlook for the week - 17.02.2014 - 21.02.2014

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Telecom stocks are expected to trade in a range as investors will now await to see if the payout for the spectrum acquired in the auction concluded on Thursday will put strain on the balance sheets of companies. Telecom companies had shelled out 611.62 bln rupees in the spectrum auction, out of which upfront payment of 182.96 bln rupees will be made in the current financial year. The bidding was aggressive and ended slightly above our estimates. It will raise the net debt levels of an already highly leveraged industry. Total debt in the industry is estimated at about 2.5 trln rupees. Bharti Airtel in statement said that it had acquired spectrum at 185.30 bln rupees and will make an upfront payment of 54.25 bln rupees. According to Notice Inviting Application, telecom companies will have to make an upfront payment of 33% for 1,800 MHz spectrum and 25% for 900 MHz spectrum. Idea Cellular is estimated to shell out 109 bln rupees for spectrum acquired with the upfront payment to be made at 33 bln rupees. Both Bharti Airtel and Idea Cellular are expected to trade in a narrow range next week. 

Telecom Stocks Outlook 10.02.2014 - 14.02.2014

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Telecom stocks are seen trading in a range, with all eyes on the ongoing spectrum auction, awaiting cues. Today is the fifth day of the telecom spectrum auction. At the end of Day 4, the government had got provisional bids worth over 510 bln rupees for all the spectrum put on the block. The government has put on the block 385.2 Mhz pan-India spectrum in the 1,800 Mhz band and 46 Mhz spectrum in the 900 Mhz band for Delhi, Mumbai and Kolkata circles. An industry said even if the auction continues in the coming days, the overall bids for the entire spectrum are not expected to see any significant rise from the current level, as the bidding intensity--seen in the first three days--has peaked out. If the auction concludes next week, investors will see whether incumbent operator Bharti Airtel has been able to retain its spectrum holding in the 900 Mhz band or not. The company is jostling with other operators to acquire 900 Mhz spectrum in the three circles. For Delhi and Kolkata circles in the 900 Mhz band, the company will have to vacate its spectrum when the licences for the two expire in November. If they want to retain the spectrum in the two circles, they will have to acquire it back in the auction being conducted currently. Eight telecom companies--Bharti Airtel Ltd, Reliance Jio Infocomm Ltd, Idea Cellular Ltd, Vodafone India Ltd, Reliance Communications Ltd, Telenor's Telewings Communications Services Pvt Ltd, Aircel Ltd and Tata Teleservices Ltd are participating in the auction. Reliance Communications may start the coming week week on a bearish note, as the company's Oct-Dec result announced today was below Street estimates. The company's consolidated net profit for the reporting quarter was 1.08 bln rupees.

Telecom Stocks Outlook for the week - 06.01.2014 - 10.01.2014

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Telecom stocks are expected to trade in a narrow range next week with the Telecom Commission expected to meet Tuesday to decide on the contentious issue of spectrum usage charges. Telecom Commission, the highest decision making body in the telecom department, will have to decide on the spectrum usage charge that telecom companies will have to pay for the bandwidth acquired through the auction scheduled in February.
    
Telecom companies currently pay spectrum usage charge in the range of 2-8% on their adjusted gross revenue annually, depending on the amount of spectrum they hold, circles they operate in, among others. Incumbent telecom operators such as Bharti Airtel, Vodafone India and Idea Cellular that pay about 7-8% as spectrum usage charges have demanded that the fee be levied at flat 3% as recommended by the Telecom Regulatory Authority of India on Sep 9. If the usage fee is levied at 3% then it is seen positive for the incumbent operators.

Telecom Stocks Outlook for the week - 30.12.2013 - 03. 01.2014

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Trend for major telecom stocks is seen positive next week as they are seen making pullback after corrections in the past few sessions. Telecom stocks will also eye the likely meeting of the Telecom Commission, which is expected to take up the issue of spectrum usage charges Tuesday. The Telecom Regulatory Authority of India had recommended that the spectrum usage charge, which is currently in the range of 2-8%, should be kept at 3% of the companies' adjusted gross revenue per year. The Department of Telecommunications is currently deliberating the issue with the finance ministry. 

Most of the telecom companies, including Bharti Airtel and Idea Cellular, have demanded that the charge be levied at flat 3%. Any change in the existing slab rate based charges to a flat one is expected to lead to big financial ramifications for the government resulting in possible decline in revenues, while it is seen positive for telecom companies. 

Telecom Stocks Outlook for the week - 23.12.2013 - 27.12.2013

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Telecom stocks are expected to trade in a narrow range ahead of expiry of futures and options contracts next week. Though rangebound, the stocks are expected to tail the broad market which is seen trading with a positive bias. Foreign institutional investors have shown their positive interest in the Indian equities even after the RBI (Reserve Bank of India) and Fed policy. However, volatility cannot be ruled out in the coming week as a result of expiry of December contract series.

On the broader policy front, the telecom companies will be eying the government's decision on recommendations of the Telecom Regulatory Authority of India on the spectrum usage charges. The regulator has suggested that the charge, which is currently in the range of 2-8%, should be kept at 3% of the companies' adjusted gross revenue per year.
    
The Department of Telecommunications is currently in discussion with the finance ministry on the issue.Industry body Cellular Operators Association of India has endorsed a uniform spectrum usage charge of 3% of adjusted gross revenue for all operators offering voice and data services in the country as suggested by TRAI.

Telecom Stocks Outlook for the week - 16.12.2013 - 20.12.2013

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Trading in telecom stocks is likely to be stock specific next week with Idea Cellular expected to move sideways, while the downside in the stocks of Bharti Airtel is seen limited. Investors next week will eye the November subscriber numbers of companies using the global system for mobile communications platform. As on Oct 31, GSM user base stood at 683.15 mln with Bharti Airtel leading the pack at 194.87 mln as per data released by GSM body Cellular Operators Association of India last month. After having traded negatively in the last one week, Bharti Airtel is seen trading sideways in the coming sessions. Long accumulation of the stock has been seen after the announcement of infrastructure sharing pact with Reliance Industries this week. Buying by institutional investors has been seen after the deal was announced and the pact is seen positive for both the companies as it will help reduce their operational cost. Bharti Infratel, the listed tower subsidiary of Bharti Airtel, will benefit from the deal and is seen trading positively in the coming sessions. Downside for Idea Cellular is seen limited with investors remaining largely bullish on the stock. Next week, the stock is expected to trade near to its all-time high of about 190 rupees. Despite having seen corrections in the last several sessions, trend for Tata Communications is seen positive with downside being limited. The stock had undergone profit booking lately, but is expected to make gains in the coming sessions. Reliance Communications, which for several sessions has not been able to cross its crucial resistance level of 135 rupees, is seen weak. Reliance Communications is expected to continue with its weak trend with selling pressure expected to continue in the stock.

Telecom Stocks Outlook for the week - 09.12.2013 - 13.12.2013

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Telecom stocks next week will track the broad market, whose direction will hinge upon the assembly election results in Rajasthan, Madhya Pradesh, Chhattisgarh and Delhi, to be announced Sunday. The markets preferred to stay standstill for most part of the session on Friday and inched marginally up in the end. Though exit polls have already cleared the state election's picture, the results will be declared on Sunday i.e. 8 Dec, 2013. And, we'll see the market reacting on final numbers on Monday. 

Telecom companies--otherwise likely to trade stock-specific--are expected to ride on the momentum and gain if the Nifty is able to trade above 6,300 mark and more. The market is looking for a strong, stable government post 2014 elections and it seems that these results will likely make the market think that BJP (Bharatiya Janata Party) could emerge as the lead party in the 2014 elections. 

Telecom Stocks Outlook for the week – 02.12.2013 - 06.12. 2013

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Telecom stocks next week will eye the meeting of the Empowered Group of Ministers on spectrum, which is scheduled to meet Tuesday to discuss the proposed merger and acquisition norms and the sector regulator's proposal on spectrum usage charges. The ministerial panel, which met last Friday, had decided it would meet again to mull the Telecom Commission's proposal, which had recommended that merged entities be allowed to have up to 50% market share in a circle, after having paid the market-determined price for the acquired spectrum as a result of the merger. The panel will also have to take a call on whether spectrum usage charges paid by the telecom service providers to the government should be kept at a uniform 3% of their annual adjusted gross revenue as per the recommendations of the Telecom Regulatory Authority of India. Currently, telecom service providers pay spectrum usage charges in the range of 2-8% depending on the amount of spectrum held by them. 

We believe the regulatory environment continues to improve and so we have retained our positive stance on Bharti Airtel and Idea Cellular. In terms of the performance of telecom stocks next week on the indices, the trend is seen mixed. Bharti Airtel is expected to trade negatively next week with the stock expected to decline to 318 rupees. Persistent selling pressure on the stock may lead to the stock to decline to as low as 309 rupees, adding that the upside for the stock is seen limited to 335 rupees. We recommended that investors should adopt a 'sell on rise' strategy for Idea Cellular as reversal in the stock's recent uptrend is seen in the coming sessions. 

Telecom Stocks Outlook for the week - 18 -11.2013 - 22.11.2013

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Telecom stocks are expected to trail the broad market next week and recoup losses made in the current week, making sort-term pullback. The National Stock Exchange's 50-stock Nifty ended above the psychological mark of 6,000 points, snapping its seven-session losing streak. Reliance Communications is expected to trade positive next week, but gains are seen limited. The company, which announced its Jul-Sep earnings this week, posted a six fold increase in consolidated net profit at 6.7 bln rupees on account of a provision write back of 4.4 bln rupees. Aggressive accounting policies are negative, with provision write-backs being credited to the income statement in two of the past three quarters. The upside for the stock is seen limited next week at 144-145 rupees and initial support is seen at 134 rupees and then at 128 rupees. Both Bharti Airtel and Idea Cellular are expected to trade with a positive trend after having gone through corrections in last few weeks. The short-term pullback for Bharti Airtel, which has commenced from 14.11.2013, is expected to continue next week. The stock is expected to reach 350-355 rupees, while support is seen at 328 rupees. The trend for Idea Cellular is seen better than Bharti Airtel, and the stock is expected to reach around 180 rupees. Support for the stock has been pegged at 164 rupees. Tata Communications is seen facing resistance at 290-295 rupees, while support is likely to be at 260 rupees. He recommended that investors may book profit at about 295 rupees, and again accumulate the stock at about 255 rupees.

Telecom Stocks Outlook for the week - 11.11.2013 - 15.11.2013

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Telecom stocks are expected to trade with a bearish trend next week in line with the broad market and as investors are expect to continue booking profits in select stocks. Investors are expected to refrain from taking large bets in telecom stocks until more clarity emerges post the upcoming meeting of the Empowered Group of Ministers on spectrum, expected in next few weeks. The Telecom Commission has proposed about 25% hike from the Telecom Regulatory Authority of India recommended spectrum reserve price, a move opposed by the industry. The proposals of the commission have to be vetted by the ministerial panel. 

Currently, the view on telecom stocks is neutral until come clarity emerges post the meeting of the ministerial panel. As of now, we think stocks are pricing the upside from recent/ potential RPM (revenue per minute) hikes but not the downside on regulatory overhangs. The sector should move beyond the ongoing fiasco about spectrum reserve prices and participate in the upcoming auction with discipline.

A well conducted auction (that prevents collusion) should yield the fair market price of spectrum irrespective of the starting reserve price. Bharti Airtel that is currently trading with a weak bias for the short-term is expected to see more downside in the coming week, with the stock expected to decline to about 330 rupees. Idea Cellular, which saw about of profit taking in the last few weeks is expected to gain in the coming week to about 175 rupees, but is expected to see another round of profit booking after making small gains. 

Reliance Communications is expected to continue making "lower tops and lower bottoms" indicating that the downtrend for the stock continues. The stock is expected to trade in the narrow range. After making significant gains in the last few weeks, Tata Communications is expected to see some corrections, though the trend for the stock remains positive.