Telecom Stocks Outlook for the week – 18 to 22.05.2015
(Range-bound
next week in absence of cues)
( www.rupeedesk.in )
Stocks
of major telecom companies, including Bharti Airtel, Idea Cellular, and
Reliance
Communications,
are expected to remain in a range next week, in the absence of any
sector-specific trigger on the horizon. Next week, the stocks of telecom
companies are going to mirror the trends of the week ago, primarily due to
continued weak momentum in stocks and no major trigger in the sector.
The
stocks of most of the telecom companies were trading in a narrow range for the
last two-three weeks and the trend is expected to continue in near-term unless
they cross the resistance value On May
14, Bharti Airtel announced to launch of 4G trials for its existing 3G
subscribers in Chennai. Hope with increasing focus of Bharti Airtel on 4G
services might help the stocks in the long-term, but no immediate impact is
seen this week. In the month of April, the operators have collectively added
6.4 mln new users to the network compared to 8.2 mln added in March.
The
longpending GST bill that was approved by Lok Sabha last week is also unlikely
to have an impact on the telecom sector. We do not see major benefit of GST on
telcos, except some minor benefits on the capex front (entry tax on capex
elements). Given that diesel is out of GST ambit, we do not see any meaningful
benefit to the telecom players. Further, the increase of service tax from
12.36% to 16.00% also remains negative; as service tax burden on the full talk
time pack is bear by the Indian wireless companies and it would be very
difficult to pass on to the customer.
