GOLDEN RULES FOR TRADING

Telecom Stocks Outlook For The Week – 26 To 29.12.2017

Telecom Stocks Outlook For The Week – 26 To 29.12.2017


             Equity Cash/Futures/Options Segment 

Stocks of telecom companies are seen falling next week because investors may remain cautious as financials of the companies in the sector are likely to remain under pressure. We expect stock prices in the sector to stabilize over the medium to long term on account of the consolidation, but remain cautious as financials of the companies in the sector may be under pressure. Earnings for the December quarter are likely to be weighed down by a cut in interconnect usage charges by the
Telecom Regulatory Authority of India to 6 paise from 14 paise, effective Oct 1. Interconnect usage charges are paid by the operator from whose network a call is made to the network the call lands on. About 4% operating income of Bharti Airtel comes from revenue from interconnect usage charges.
Next week, shares of Bharti Airtel are seen under pressure. Over the medium term, however, the market leader is seen benefiting from consolidation in the sector and is seen best placed to capitalise on the opportunities. The company has already announced the acquisition the wireless mobile operations of the Tata Group on a cash-free, debt-free basis, and also Telenor India and Tikona Digital Networks. However, the company will lose its market leader position after the merger of
the second and third largest operators--Vodafone India Ltd and Idea Cellular Ltd-completes next year. Earlier this month, Chairman Sunil Mittal said he hoped that the company will reclaim the top spot by March 2019.

Source : Cogencis Information Services Ltd.

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