Telecom policy draft rings cheer with stocks

Our Bureau Mumbai | Updated on October 10, 2011


Analysts say easing of M&A rules will help consolidation

The draft telecom regulations spelt out good news for the industry: most of the telecom stocks were up by about 2 per cent as the draft policy was released. It was post the policy release at 3 p.m. that the stocks moved up, until when they were trading within a range.

The highest gainer of the day among the telecom stocks was Tata Tele services (Mah) Ltd, which went up by 3.63 per cent. TTML ended the day at Rs 17.15 a share. The other stocks which ended the day up were that of Idea Cellular (1.33 per cent), Tata Communications (2.39 per cent), Bharti Airtel (2.38 per cent) and MTNL (2.47 per cent).

“On Friday most of the telecom stocks had fallen in apprehension that the draft would bring some bad news. So, the recovery of these stocks today was based on the reassurance that the draft is not along the expected lines of bringing bad news,” said Mr Jagannadham Thunuguntla, Strategist and Head of Research, SMC Global Securities. However, analysts and industry representatives are split in their views on the draft policy. Industry insiders are happy; they say that the policy has hinted towards an easing of the M&A rules for the industry, making it easier for consolidation.

Also, the further release of 300 Mhtz of spectrum by 2017 and another 200 Mhtz by 2020 is being seen as positive. Another boost for the industry is the telecom industry has been recognised as part of the infrastructure sector.

However, stock analysts are worried that the draft policy is too broad-based, making it easier for its finer points to be tinkered around with in the future. “It looks like the 2G fiasco has led them to draft a policy which is very loosely defined so that they can incorporate any amendments that will come along,” said an IT analyst with an Indian brokerage.

Published on October 10, 2011

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