Telecom Stocks Outlook for the week: 07 - 11.01.2013

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Telecom stocks are expected to trade positively next week as they continue to hold above key support levels, and also because key companies of the sector are seen holding pricing power. This is expected to be a turn around year for Indian telecom. The sector is seen having power to raise tariffs, once the spectrum price has been discovered, and will also witness consolidation. Tata Teleservices Ltd, which provides its services in Delhi and National Capital Region under the Tata Indicom brand, has raised tariffs to 1.5 paise/second from 1.2 paise/second for both local and STD calls, effective Jan 2. Others are expected to follow soon as telecom companies have been long stressing that there is a need to revise tariffs upwards. Investors would also eye the outcome of the meeting of the Empowered Group of Ministers on spectrum on Monday, which will take decisions on auction modalities for the upcoming sale of spectrum in 1,800 MHz and 900 MHz bandwidth. Major telecom stocks such as Bharti Airtel Ltd and Idea Cellular Ltd have continued to hold above their crucial support levels and the momentum for them is seen strong in the coming sessions.

Telecom Stocks Outlook for the week: 31.12.2012 - 04.01.2013

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Heading into the new year, the overall trend for telecom stocks remains positive, but counters of leading companies could see some profit booking in the coming week. Stocks of Bharti Airtel Ltd and Idea Cellular Ltd are expected to see a downward correction of about 5-7% in the coming two weeks. However, investors have mostly taken long positions in the January futures contract in telecom stocks, indicating bullish sentiment. Next week, the ministerial panel on spectrum is expected to meet to decide on the timeline and auction modalities for sale of spectrum in Delhi, Mumbai, Karnataka and Rajasthan circles in the 1,800 MHz bandwidth and for Delhi, Mumbai and Kolkata circles in the 900 MHz bandwidth. Both existing and new service providers are expected to clamour for the lucrative 900 MHz spectrum bandwidth when it is put on the block before the end of the current financial year. Bharti Airtel, which has risen about 3.8% over the last one week, is expected to see some correction and find support at 299-300 rupees. Initial resistance for the stock is seen at 330 rupees and then at 336 rupees.

Telecom Stocks Outlook for the week (10-14.12.2012)

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Telecom stocks are expected to trade with a positive bias next week as investors see clarity slowly emerging in the sector after the conclusion of the spectrum auction in the 1,800 MHz bandwidth. Also, the ministerial panel on spectrum yesterday decided to reduce the base Price for the Delhi, Mumbai, Karnataka, and Rajasthan circles in the 1,800 MHz band by 30%. These circles went without any bids in the spectrum auction held. The decision is likely to reinvigorate interest by telecom companies such as Bharti Airtel Ltd and Idea Cellular Ltd that had refrained from bidding for lucrative Delhi and Mumbai circle on account of high base price.  Telecom stocks are expected to see some short-term corrections after having risen post the spectrum auction conclusion. However, the medium-term bias for the stocks remains bullish.

Telecom Stocks Outlook for the week: 03-07.2012

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With the lukewarm response to the recently held auction of spectrum in the 1,800 MHz bandwidth, leading to less than expected outgo on spectrum acquired and the one-time spectrum charge to be levied on operators, telecom stocks are expected to trade positively next week. As part of its decision on one-time spectrum charge, the government had decided to levy one-time spectrum fee prospectively on operators for the remaining period of their licence, based on the auctioned discovered price.

Along with a muted spectrum auction, telecom companies strategy to gradually reduce dolling out freebies such as lower discounts and free minutes, is expected to improve their margins. Telecom companies are now pulling back on dealer commissions, reducing validity periods, cutting back on free minutes etc, which we believe should bode well for RPM (revenue per minute) and margins in the near term.

In the medium term, Bharti Airtel and Idea Cellular are expected to rise another 10% from their current level. We reiterate our Buy on Bharti and Idea as we expect both telecom companies to benefit from rising tariffs and declining competition. In the December futures contract, investors have taken long positions on telecom stocks, indicating that the bias for them remains positive.

Telecom Stocks Outlook for the week (19-23.11.2012)

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With the conclusion of the auction of spectrum in the GSM bandwidth in which the majority of the Indian telecom operators provide their services, the much-needed clarity seems to be emerging for the beleaguered sector. Accordingly, telecom stocks are seen rising next week. We believe any re-pricing of 2G spectrum will be positive for the industry, which is already suffering from the stretched balance sheets, limited flexibility and low payoffs from 3G/4G investments.

The GSM spectrum auction, which concluded on Wednesday, saw total bids worth 94.08 bln rupees. The government, is targeting to raise 400 bln rupees from spectrum sale in 2012-13 (Apr-Mar) and the low mop-up will make its task harder to meet the aim. Telecom companies had bid for 18 out of the 22 telecom circles, leaving Delhi, Mumbai, Rajasthan and Karnataka circle with no buyers. Stocks are expected to react positively to any decision by the government to lower the reserve price for the remaining four circles.

Telecom Stocks Outlook for the week (12-16.11.2012)

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Telecom stocks are expected to trade in a narrow band next week as domestic stock market will remain closed on Tuesday and Wednesday for Laxmi Pujan and Diwali Balipratipada, respectively.

From Monday, the auction for the 1,800 MHz (global system for mobile) spectrum would commence that would see participation from five telecom companies, including Bharti Airtel Ltd, Vodafone South Ltd and Idea Cellular Ltd. The government has set a base price of 35 bln rupees for per block of 1.25 MHz spectrum in the 1,800 MHz and will be auctioning minimum 10 MHz per circle area. Telecom stocks, have been avoided by investors for some time now, on account of regulatory and policy uncertainty. However,we expect the long overhanging uncertainty surrounding the sector to get over now as the government recently gave their decisions on the major policy issues.

Cabinet on Thursday approved the one-time spectrum charge on telecom companies, which is expected to lead to an outgo of 310 bln rupees. Earlier ministerial panel on spectrum headed by Finance Minister P. Chidambaram had allowed incumbent operators such as Bharti Airtel to retain 2.5 MHz of spectrum in the 900 MHz once their licences come for renewal beginning 2014.

Telecom Stocks Outlook for the week (22-26.10.2012)

Telecom stocks are expected to trade in a narrow range next week, and investors would keep a close watch on Cabinet decision over one-time spectrum fee, likely to be taken in the coming week. Uncertain regulatory environment and expected outgo of billion of rupees on account of spectrum re-farming, one-time spectrum fee and participation in the 2G auction bids have kept investors at bay.
   
The Empowered Group of Ministers headed by Finance Minister P. Chidambaram has decided to charge companies for spectrum held beyond 4.4 MHz prospectively, and additional retrospective charge on operators that held spectrum beyond 6.2 MHz from May 2008 onwards. The Telecom Commission has also recommended that operators that are currently using the 900 MHz band should be moved to 1,800 MHz band, once their existing licences come up for renewal.
 
The Cabinet is expected to take a final call on re-farming next month before the auction commences from Nov 12. Bharti Airtel is expected to trade sideways with a negative bias next week.

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Telecom Stocks Outlook for the week (15-19.10.2012)

Telecom stocks are expected to trade range-bound next week, while action in the medium term will mostly be subdued on account of regulatory headwinds and expected outgo on account of 2G spectrum auction bid and one-time spectrum fee. Unless and until there is clarity on impending financial issues, regulatory issues, till the time 2G auction and one-time spectrum fee are finalised, and also there is a decision on spectrum refarming before all these things get finalised.

Though the decision of the Empowered Group of Ministers to levy one-time spectrum fee for bandwidth held beyond 4.4 MHz for GSM operators and 2.5 MHz for CDMA operators prospectively, will financially strain the companies, it has brought clarity over the issue. EGoM's decision has to be approved by the Cabinet, which is expected to meet on Tuesday.

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Telecom Stocks Outlook for the week: 17.09.2012-21.09.2012

Telecom stocks next week will track the broad market, which is expected to be positive following the decision by the Cabinet yesterday's to implement foreign direct investment in multi-brand retail and allow foreign airlines to buy stake in Indian carriers.

The sector, which has underperformed in the past few months, may see some value buying and consolidation in the near term. If the broad market does not break down from the current level, then telecom stocks are expected to do well.

State-owned Mahanagar Telephone Nigam Ltd has seen building of long positions in its current month futures contract. News about the company's plans to monetise its land banks and rent out its built-up area to generate revenues, have helped lift the stock.

Bharti Airtel is expected to gain in the coming sessions, as the current valuations looks attractive for investing in the stock and further corrections is seen limited.

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Telecom Stocks Outlook: 10-14.09.2012

Stocks of Idea Cellular Ltd and Mahanagar Telephone Nigam Ltd are seen faring better this week. A long-term bet on the stock (Bharti Airtel) is too dicey. With the overall trend in the counter still being bearish. Investors' confidence in the sector remains negative on slew of mounting concerns, both on the regulatory front and fundamentals. Debt financing has become tough post the licence cancellation, and intermittent regulatory intervention in various operational matters has really dented investor confidence. Mahanagar Telephone Nigam, which has risen about 3.4% in the last one week, is expected to consolidate between 34-40 rupees and is seen better laced than Bharti Airtel.

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Telecom Stocks Outlook for the week (03.09.2012-07.09.2012)

Telecom stocks are expected to trade range-bound and movement will be stock specific next week, as investors continue to shy away from the sector on account of regulatory hardships and high level of leverage. As per memorandum, the telecom department would commence the auction of 2G spectrum from Nov 12 onwards and reiterated the Cabinet's decision of setting the reserve price for auction 5 MHz of 1,800 MHz bandwidth at 140 bln rupees. Overall, it is hard to see many positives in the spectrum auction guidelines and the only respite would be if the auctions fail altogether, which we don't think is entirely likely.

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Telecom Stocks Outlook for the week (27-31.08.2012)

The performance of telecom stocks will remain subdued in the coming week as the industry is faced with regulatory obstacles amid a dearth of positive trigger in the near term. Lacklustre performance by industry leader Bharti Airtel in its Apr-Jun result and management commentary on the company's expectations of margin dilution in the coming quarters will keep the stock under pressure in the medium term.

Even though fundamentals remain weak for Bharti Airtel, the stock seems to be in the oversold territory on the technical chart and may see some value buying in the coming sessions, which may drive the stock up to near 265 rupees. Trend in Idea Cellular is expected to be sideways, with resistance at 78 rupees and support at 70 rupees.

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Telecom Stocks Outlook for the week (21-24.08.2012)

High cost of spectrum and unfavourable regulatory environment is seen limiting any significant upside in telecom stocks next week and in the medium-term.  The Union Cabinet-approved base price for the upcoming auction of 2G spectrum is expected to further strain telecom companies' balance sheets, which is already highly leveraged.

The Cabinet has set 28 bln rupees as the base price for auction of 1,800 MHz GSM bandwidth, while the base price for 800 MHz CDMA has been set at 1.3
times to that of 1,800 MHz band.

The auction may receive a subdued response as most players are highly leveraged and are finding it difficult to service their existing debt. The Supreme Court, which has mandated that the 2G auctions be completed by Aug 31, has been approached by the government to extend to deadline to Nov 12 on the ground that adequate time needs to be given to conduct the auction in a fair and transparent manner.

The government has selected Times Internet Ltd as the auctioneer to conduct the spectrum sale.

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Telecom Stocks Outlook for the week (13-17.08.2012)

Current adverse regulatory environment and a disappointing quarterly result from sector bellwether Bharti Airtel are expected to weigh on telecom stocks in the coming sessions. Telecom stocks are expected to under-perform the broad market in the medium term and currently investors have been recommended reducing their exposure to the sector.

Bharti Airtel on Wednesday announced a disappointing set of numbers for the Apr-Jun quarter, with net profit declining 24.2% on quarter to 7.62 bln rupees, as sales were impacted due to higher service tax and regulatory restrictions. In the futures segment, Bharti Airtel has seen significant build-up of short positions. In the coming sessions, the stock is expected to see consolidation between 250-290 rupees.

Delay in the commencement of the 2G spectrum auction process prolongs the uncertainty for the telecom companies, whose balance-sheets are highly stretched on account of high amount of debt raised for acquiring 3G spectrum in 2010.

The government has appealed to the Supreme Court to extend the Aug 31 deadline for conducting the auction to November. Telecom service providers have claimed that the final 2G spectrum reserve price and the Department of Telecommunication's proposal to levy one-time spectrum fee on service providers will add further pressure on their operations.

The Union Cabinet has set the base price for the auction 5 MHz of spectrum in the 1,800 MHz spectrum bandwidth at 140 bln rupees, against 181.1 bln rupees recommended by Telecom Regulatory Authority of India. Service providers have termed the base price as high. The base price is seen negative for incumbents such as Bharti Airtel, whose licences will come up for renewal in 2014-15.

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Telecom Stocks Outlook for the week (30.07.2012 - 03.08.2012)

                Telecom stocks will next week eye the outcome of the likely Union Cabinet decision on the proposed spectrum auction modalities, which includes the recommendation on spectrum reserve proposed by the Empowered Group of Ministers, headed by Home Minister P. Chidambaram. According to an official of the telecom department, the final note on spectrum auction norms is under process and is likely to be placed before the Cabinet early next week, and may be taken up for a decision during its weekly meeting. The EGoM is learned to have recommended a base price in the range of 140-160 bln rupees for the auction of 5 MHz of spectrum in the 1,800 MHz band, down nearly 23% from Telecom Regulatory Authority of India's proposed 181.1 bln rupees. The base price for auction of spectrum in the 800 MHz band has been recommended at 1.3 times the final base price for the 1,800 MHz band.

                Investors will also eye the Apr-Jun earnings of OnMobile Global to be announced on Tuesday. For the quarter, the company is seen reporting a consolidated net profit of 154 mln rupees on revenues of 1.87 bln rupees. International revenues to continue posting significant growth in Q1FY13 (Apr-Jun), while the domestic revenues are expected to remain subdued. Stocks of OnMobile Global are expected to trade at 28-41 rupees next week.

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Telecom Stocks Outlook for the week (16-20.07.2012)

Telecom Stocks Outlook for the week (16-20.07.2012)

Telecom stocks next week will take cues from the meeting of the Empowered Group of Ministers on spectrum, likely on Monday or Tuesday, to decide on spectrum auction modalities, including the contentious issue of spectrum reserve price.

On Apr 23, the Telecom Regulatory Authority of India had recommended a reserve price of 36.22 bln rupees per 1 MHz of spectrum in the 1800 MHz band
at a pan-India level, which has been termed as exorbitantly high by telecom operators.

The ministerial panel, headed by Home Minister P. Chidambaram, in its meet Thursday gave approval for the mortgage of spectrum by telecom companies to secure funds from banks and is expected take a call on rollout obligations norms for the auctioned spectrum in its next meet.

Telecom Stocks Outlook for the week (09 - 13.07.2012)

Telecom Stocks Outlook for the week (09 - 13.07.2012)

Telecom stocks are seen trading higher next week on the back of the split judgement given by the Telecom Disputes Settlement and Appellate Tribunal Tuesday on the legality of intra-circle roaming pacts between operators for 3G services. The verdict means there is a status-quo as of now, whereby service providers like Bharti Airtel, Vodafone India and Idea Cellular, which do not have 3G spectrum in some circles, can continue providing 3G services in circles where they do not have licence, according to legal counsel representing the companies. Stocks will also takes cues from the meeting of the Empowered Group of Ministers likely to be held on Monday. The panel will be now headed by Home Minister P. Chidambaram. According to reports, the panel will now only decide the modalities of the 2G spectrum auction process, whereas the contentious issue of spectrum reserve price will be decided by the Union Cabinet. Stocks of Bharti Airtel are seen trading positively, as investors havetaken long positions and as the stock has been able to close above its crucial resistance level of 320 rupees.

mab � y e � @ ign:justify'>Markets, especially Bank Nifty still has some short positions standing in it and these shorts would lend support in every dip. As downside looks limited in large caps and positive bias and consolidation are two likely probabilities, midcap may catch up with large caps and outperform in near term. Early trends in Apr-Jun earnings will also emerge next week, with IndusInd Bank and HDFC Bank slated to declare their results on Tuesday and Friday, respectively. Apr-Jun is generally a subdued period for bank profits, especially on-quarter, as it coincides with slack loan demand season for the industry. Overall, we do not expect any major surprises in Q1FY13 (lacklustre due to seasonality). While our top large-cap picks are SBI and Axis Bank, we prefer YES Bank among mid-caps from a long-term perspective. Punjab National Bank and Oriental Bank of Commerce on strong asset quality while it sees Union Bank of India report lacklustre numbers.
ann� 5 e � @ two weeks. The company has been aggressively buying its stock at levels around 700 under the ongoing buyback at up to 870 rupees per share and that has supported the counter. However, little upside from current levels in the near term. We believe RIL's core business will show earnings growth starting in 3Q FY13 (Oct-Dec), after three quarters of poor to flat results, but any turnaround will likely be modest, predicated on our projection of only moderate improvement in RIL's refining margin and a bottoming out of petrochemical margins.
er} � e � @ headroom for upside potential following the recent rally in the stock.