Calibrated voice tariff hike to aid telcos earnings: IIFL

Stocks in the telecom sector have had a big rally today and some of it is in expectation that tariff hikes will follow in the voice segment as early as next week. In an interview to CNBC-TV18, GV Giri of IIFL said tariff hikes in the voice segment by next week is certainly possible in a more calibrated manner.

2G data tariff rates have been raised by 20-30 percent. "Those are big numbers and over the next six to eight months we will see them filter down into the yield per minute and per megabyte", says Giri. Below is the edited transcript of his interview to CNBC-TV18 Q: Does this change surprise you and what do you make of it? A: I have not studied this at all. I just came to know this. Q: Sanjay Kapoor has stepped down from Bharti and now we understand that Gopal Vittal has taken over. If this transitional change will take place is there any impact that you would see on the business? A: I have no idea, I can only comment on what the broad industry trends are. They are positive and have trust that the incoming CEO will do at least as good a job as the outgoing CEO. Q: Stocks in the telecom sector have had a big rally today and some of it is in expectation that tariff hikes will follow in the voice segment as early as next week. Are you expecting that? A: Not some headline grabbing spectacular splash but in a more calibrated manner yes that is certainly possible. Whether it happens in terms of headline tariff going up or through discounts coming off, one way or the other it will happen. I understand that 2G data tariff rates also have been raised by 20-30 percent. Those are big numbers and over the next six to eight months we will see them filter down into the yield per minute and per megabyte. Also read: Bharti Airtel top gainer, spurts 5%; Idea at 4-year high Q: What is your recommendation on the Bharti stock itself and what is your expectation from this quarters earnings? A: We have a buy recommendation on Bharti and Idea now for sometime. I still believe that there is some steam left. This quarter’s earnings should be capable of delivering a positive surprise. Added to the seasonality bounce back between Q2 and Q3 there will also be the factor that we will see a full quarter of savings from selling expense reduction. Last quarter there was only a half quarter saving.