Wait to accumulate telecom stocks: Girish Pai

Girish Pai, Independent Analyst is of the view that one needs to wait before accumulating telecom stocks and see how sticky this pricing upmove is going to be.

Pai told CNBC-TV18, “I have seen the news on the pricing being upped, but I do not know exactly how much increase we are going to see in the Revenue Per Minute (RPM) for these companies (Bharti Airtel, Idea Cellular and Reliance Communication). A couple of years back when some of the new entrants went off the radar and there was an expectation that price would increase, but that was not to be. Just for a brief period of time there was higher pricing and after that the pricing pressure emerge. So one needs to wait and see whether the price increases are sticky and how large is this quantum going to be on the very large base of minutes that they are going to sell. So I will wait, but I think the key issue is whether we are going to see a new competition coming in from Reliance on the voice side. That is a big unknown at this point in time. Reliance typically tends to be a bit aggressive on pricing and if that happens I would think that the current price, the upmove that we have seen would be short-lived. So one needs to wait and see how sticky this pricing upmove is going to be.”