Telecom Stocks Outlook for the week – 20 to 22.10.2014
( www.rupeedesk.in )
Stocks
of frontline telecom companies are expected to follow the broader markets,
and
will also take cues from Idea Cellular's Jul-Sep earnings to be announced on
Monday.
Telecom stocks are expected to follow the broader market cues. Over the
past
few weeks, stocks of telecom companies were in line with the broader
markets.
Idea Cellular Ltd is expected to report a 1% on-year increase in revenue,
and a
50% jump in its net profit in the Jul-Sep quarter. Revenue is seen at 74.57
bln
rupees, down 1.3% on quarter, while the net profit is seen at 6.73 bln rupees,
down 8%
on quarter. Historically, second quarters have been seasonally weak for
India
telecom companies with lower minutes of usage.
Although
we expect 2Q FY15 to be similar, we believe that voice revenue per
minute
remained higher on a year/year basis. With the continued rise in data share,
the
blended revenue per minute for the industry (is) likely continued to improve.
We
remain OW on Bharti Airtel, Idea Cellular and Bharti Infratel and retain our UW
rating
on RCOM.
The
markets are also expected to factor in the recent recommendations of the
Telecom
Regulatory Authority of India on the reserve price of spectrum during the
upcoming
auction. The government is yet to take a final view on the
recommendations
of the regulator. The Indian regulator's latest recommendations
on
spectrum read much more telco-friendly than some of the previous ones we
have
seen. The focus is very much on addressing spectrum supply issues rather than just prices (although
1800MHz reserve prices are raised by 9%).
