Uncertainty still exists in telecom sector: Analysys Mason

Telecom tribunal TDSAT today gave a split verdict in the 3G intra-circle roaming case. In an interview to CNBC-TV18, Kunal Bajaj, Analysys Mason says, it is not a respite because there is continued uncertainty. “The uncertainty is clearly having an impact on the overall price,” he adds.

According to him, Bharti Airtel is potentially the strongest one to be able to get through all this. Also read: TDSAT gives split verdict in 3G roaming dispute Below is the edited transcript of his interview on CNBC-TV18. Also watch the accompanying video. Q: How would you approach these stocks now? For the moment respite, therefore you buy the stock. A: It is certainly not respite because there is continued uncertainty. The uncertainty is clearly having an impact on the overall price. But we really don’t know which direction the government is going to go. So, until we actually see some indications of what they are going to agree to and what not then I don’t think it’s really a safe bet at the moment in terms of trying to predict exactly which way the valuation of the organisation is actually going to go. Q: Considering that there are so many regulatory overhangs, which the telecom space is currently suffering from, can you give us a sense of which company or which stock would you presume has the strongest balance sheet in order to overwrite this storm and come out possibly the least affected? A: In our analysis, we don’t necessarily look specifically at pricing of stocks in individual companies, but the favourite has been Bharti Airtel for everyone on the street. Looking at the fact that they have a variety of businesses across the telecom sector that they play in and being convergent operator, there is opportunity for growth in each of the different business areas that they are operating in today. So that probably places them as the strongest or potentially the strongest one to be able to get through all this. Q: What is your analysis of this new clause of prospective pricing? A: It remains to be seen actually what the details around the clause are going to be. We have seen some news from the planning commission and the prime minister as the finance ministry yesterday as well around maintaining level playing field. A lot of it is speculation at the moment because until the EGoM actually goes out and clarifies some of these decisions, it’s going to continue to be speculation.