Telecom Stocks Outlook for the week – 26 to 30.09.2016
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May fall next week; Bharti Airtel seen outlier
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Telecom stocks, except Bharti Airtel Ltd, will continue to decline over the next week due to impact of 4G services rollout by Reliance Jio Infocomm. The stocks will remain dull in the run up to the largest ever spectrum auction in India on Oct 1. Airwaves for high-speed 4G services worth over 5 trln rupee at the base price will be auctioned by the government. But Bharti Airtel, country's largest telecom operator, saw some recovery this week and is likely to rise more. In a fight back to Reliance Jio's offer, Bharti Airtel yesterday launched its most aggressive data plan that offered users unlimited 4G data for 90 days for 1,495 rupees. Airtel is forming a pull-back. The upward trend for Bharti Airtel may not last beyond the end of next week. Stocks of Idea Cellular and Reliance Communications Ltd are likely to decline next week. Idea Cellular has been the worst performing stock since Jio's entry. Reliance Communications may continue the downward trend until clarity emerges on the plans of the Anil Ambani-group company's proposed merger of its mobile operations with Maxis Communications-owned Aircel Ltd into a separate entity. The market will wait for details of the final debt on the books of Reliance Communications. The telecom sector will remain under pressure over the next couple of weeks as operators typically add hundreds of millions of rupees in debt to fund spectrum purchases. Recently, Vodafone Group Plc made an equity infusion of 477 bln rupees into its fully-owned subsidiary Vodafone India, a part of which will be used to buy airwaves. Seven operators have submitted their letters of interest to the government for the auction
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