Telecom Stocks
Outlook for the week – 03 to 07.10.2016
Seen down next week;
spectrum auction in focus
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Stocks of telecommunication services companies will remain
subdued next week. Concern about
Reliance Jio's free voice calls, its on going tussle with
operators over points of interconnect, and the
spectrum auction starting Saturday will weigh on stocks in
the sector. Seven operators, barring
Telenor India, will bid at the auction, which will have
2,355.4 MHz of frequencies on offer.
While the auction will plug crucial network gaps and open
revenue streams from new geographies,
operators will have to take on massive debt to acquire
frequencies. Experts said investors will focus
on the outcome of the auction before placing their bets. The
trend continues to be down for the
entire sector in the near term. Stocks of Bharti Airtel Ltd,
which saw some recovery recently, may fall.
There is still some pessimism left in Bharti. This week,
Bharti Airtel, Idea Cellular Ltd and Reliance
Communications Ltd fell 4.0-3.1%.
Idea Cellular may see a bounce-back next week. We are yet to
see a firm recovery in the stock and it
may happen sometime in the next two weeks. But the overall
trend continues to be down. The
company yesterday said its shareholders had approved raising
70 bln rupees through the issuance of
non-convertible securities on a private placement basis.
Reliance Communications is also seen
subdued next week.