Remain underweight on entire telecom sector: Dipan Mehta

Dipan Mehta, member at BSE & NSE told CNBC-TV18, "I think Bharti Airtel and Idea Cellular have to brace themselves for a massive fight in the telecom market as far as data is concerned. The communication coming from Reliance Industries is very clear that they are going to fight the industry gain market share on price point, on better service quality, many more features, new products and all the bells and whistles are going to be launched in the next few months or so. Data has been one sector which has been growing very well for the other telecom companies and that is where they are going to face maximum competition from Reliance." "Bharti and Idea need to beef up their resources, and not just financial resources, management time also which had got diverted to say, turning around African operations, they need to get refocused on the big battle coming on the Indian markets. So, I would think that many more such divestments, small and large, could be expected from Bharti Airtel," he said."None the less, we remain underweight on the entire telecom sector because of the uncertainty as far as Reliance Jio is concerned. We all know what happened when last time the competition came into the voice side with new operators and may be that can get repeated again." "Although the stocks appear to be cheap in terms of the price-earnings ratio (P/E) multiples, I am not sure that two three years down the line, in what shape you will find them in terms of their profitability in balance sheet," he added.Disclosure: Reliance Industries has acquired management control of Network18, which owns TV18 Broadcast and moneycontrol.com.