Telecom Stocks Outlook for the week – 03 to 07.04.2017
Telecom Stocks Outlook for the week – 03 to 07.04.2017
( www.rupeedesk.in )
Movement in the shares of telecommunication companies next week may take cues from a likely
announcement by Reliance Jio Infocomm Ltd on the number of subscribers under its Prime membership plan. The Reliance Industries Ltd subsidiary, which had initially offered free data and voice services to subscribers, had on Feb 21 announced that users could sign up for its Prime membership plan till today. Prime membership entails a one-time subscription charge of 99 rupees a year. Prime members enjoy more data usage on the same tariff plan compared to non-Prime members. Most operators in the telecom sector are facing stiff pricing pressure after RJio's entry, and have offered similarly priced plans. In a move seen as a response to the tariff war, Idea today announced a new 300-rupee data pack, available for subscription till Apr 30, offering 1 GB of fourth-generation data a day for a month. The pack can be availed by postpaid customers on limited rental plans of 199 rupees or higher. Though it is priced at 300 rupees, it is being offered free to all postpaid customers on rental plans of 499 rupees or higher. On Thursday, Mahanagar Telephone Nigam Ltd announced a promotional 319-rupee offer for subscribers in Mumbai and Delhi. Under this, 2 GB of third-generation data a day would be provided for a month, with unlimited calls across the MTNL network. While Reliance Communications has slashed the rates of its data packs, Bharat Sanchar Nigam Ltd announced a prepaid pack that provides 2 GB of data per day, and unlimited calls within its network at 339 rupees with a validity of 28 days. Telecom companies will continue to witness pressure on their average revenue per user for the next few quarters, owing to competition from RJio's aggressive tariff plans. The financial results of Bharti Airtel and Idea Cellular for the March quarter were likely to be hit. Last week, ratings agency ICRA Ltd said that the ongoing pricing pressure triggered by the entry of RJio, stress on operating metrics in the telecom sector, and rising debt levels were seen weighing on the financial performance of telecom companies for 2016-17 (Apr-Mar). Rising competition in the sector has also led to consolidation. Bharti Airtel last week announced a definitive agreement with Tikona Digital Networks Pvt Ltd to acquire its 4G business for about 16 bln rupees. This is Bharti Airtel's second acquisition since RJio entered the telecom sector. On Feb 23, Bharti Airtel had announced it would acquire the spectrum, licences, operations, and the employees of the Indian arm of Norway's Telenor ASA. Meanwhile, the Parliamentary Committee on Petitions earlier this month asked the government to set up an expert committee to look into a possible merger of MTNL and Bharat Sanchar Nigam Ltd. Vodafone India Ltd and Idea Cellular have also announced a merger, which is pending regulatory approvals. Mixed views on the Vodafone-Idea merger, as the outlook for both the companies in the near term does not look good due to longer transaction period and continued erosion of operating profit in the near term. Stocks of Idea Cellular have fallen almost 5.6% this week.
Source : Cogencis Information Services Ltd.
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Telecom Stocks Outlook for the week – 03 to 07.04.2017
( www.rupeedesk.in )
Movement in the shares of telecommunication companies next week may take cues from a likely
announcement by Reliance Jio Infocomm Ltd on the number of subscribers under its Prime membership plan. The Reliance Industries Ltd subsidiary, which had initially offered free data and voice services to subscribers, had on Feb 21 announced that users could sign up for its Prime membership plan till today. Prime membership entails a one-time subscription charge of 99 rupees a year. Prime members enjoy more data usage on the same tariff plan compared to non-Prime members. Most operators in the telecom sector are facing stiff pricing pressure after RJio's entry, and have offered similarly priced plans. In a move seen as a response to the tariff war, Idea today announced a new 300-rupee data pack, available for subscription till Apr 30, offering 1 GB of fourth-generation data a day for a month. The pack can be availed by postpaid customers on limited rental plans of 199 rupees or higher. Though it is priced at 300 rupees, it is being offered free to all postpaid customers on rental plans of 499 rupees or higher. On Thursday, Mahanagar Telephone Nigam Ltd announced a promotional 319-rupee offer for subscribers in Mumbai and Delhi. Under this, 2 GB of third-generation data a day would be provided for a month, with unlimited calls across the MTNL network. While Reliance Communications has slashed the rates of its data packs, Bharat Sanchar Nigam Ltd announced a prepaid pack that provides 2 GB of data per day, and unlimited calls within its network at 339 rupees with a validity of 28 days. Telecom companies will continue to witness pressure on their average revenue per user for the next few quarters, owing to competition from RJio's aggressive tariff plans. The financial results of Bharti Airtel and Idea Cellular for the March quarter were likely to be hit. Last week, ratings agency ICRA Ltd said that the ongoing pricing pressure triggered by the entry of RJio, stress on operating metrics in the telecom sector, and rising debt levels were seen weighing on the financial performance of telecom companies for 2016-17 (Apr-Mar). Rising competition in the sector has also led to consolidation. Bharti Airtel last week announced a definitive agreement with Tikona Digital Networks Pvt Ltd to acquire its 4G business for about 16 bln rupees. This is Bharti Airtel's second acquisition since RJio entered the telecom sector. On Feb 23, Bharti Airtel had announced it would acquire the spectrum, licences, operations, and the employees of the Indian arm of Norway's Telenor ASA. Meanwhile, the Parliamentary Committee on Petitions earlier this month asked the government to set up an expert committee to look into a possible merger of MTNL and Bharat Sanchar Nigam Ltd. Vodafone India Ltd and Idea Cellular have also announced a merger, which is pending regulatory approvals. Mixed views on the Vodafone-Idea merger, as the outlook for both the companies in the near term does not look good due to longer transaction period and continued erosion of operating profit in the near term. Stocks of Idea Cellular have fallen almost 5.6% this week.
Source : Cogencis Information Services Ltd.