Bharti Airtel and Idea Cellular are market performers, says Amar Ambani, Head of Research, India Infoline.
Ambani told CNBC-TV18, “I would say the worst is kind of over for the telecom sector. From that point of view I would say that these stocks will be added in terms of weightages to portfolios by a lot of buy side fund managers who were underweight and the stocks have underperformed 20-40 percent for a long time. So to that extent yes a lot of dust is settled, the cloud is clear, you can look forward to better times, better balance sheets for these companies because it was feared that huge investments would need to go in not only for bidding for spectrum but also if you had to shift from 900 MW to 1800 MW and the kind of investment that you will have to do in OPEX and towers would be huge but I think to that extent some comfort is come in for this sector.”
He further added, “Run up has already come in and from hereon I would give the likes of Bharti Airtel, Idea Cellular only a market performer kind of rating with possibly 5 percent or 10 percent upside left from here if any because there are still some headwinds that this sector faces. We know for a fact that the voice market is kind of saturating atleast in key metros it has and while there is some penetration left in the non-metros in a country like India it can take a long time for that story to unfold. At the same time we have not seen any kind of boost up in 3G data revenues so overall there are some headwinds here and therefore I would not expect a big run up from hereon but yes atleast the worst is over for the sector as such.”