Buy telecom stocks, says Dipen Sheth

Dipen Sheth, Head-Institutional Research at HDFC Securities told CNBC-TV18, "We really don't understand Reliance Communications so well. We are skeptical of the way their balance sheet is structured and other issues at the company. I think they are very aggressive player and they are going to define some changes in the market from hereon. So, I like the way they are behaving with respect to their customers' atleast. That said we don't have them under coverage."

He further added, "Between Bharti Airtel and Idea Cellular, I think the latest concern on Bharti has been its leveraged balance sheet and dollar exposure with respect to its Africa operations. Some offset will happen because not all currencies are falling against the dollar or some of the African currencies may even rise against the rupee. So, there is a little bit of internal hedging. For every rupee change in the price of the dollar, I think Bharti's net present value (NPV) cracks by about Rs 2 or so. It is not so bad as you might imagine."
"On the other hand, on the domestic market they are clear leaders and they have signaled their intent to come back into a little bit of aggression. So, I think the others especially Idea and perhaps Uninor will take note of this. Adjusted for inflation a minute of telecom is now the cheapest it has ever been in the history of this country and there can only be pricing power, which comes in from hereon, barring what disruption Reliance Jio might do. I think there is an opportunity to buy telecom. The worst of pricing pressure, competition, bad regulation, and controversies I think they have all taken their toll and this is probably a very good time to look at telecom," Sheth said.