Journalism of Courage
Even as the BSE Sensex lost ground on Tuesday,shares of telecom companies managed to buck the trend and posted gains after the Telecom Regulatory Authority of India (Trai) clarified that roaming charges will only be reduced and not abolished. Both,Reliance Communications and Idea Cellular,touched their respective 52-week-highs with Tata Communications also ending in positive territory.
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On BSE,Reliance Communications was the biggest gainer among the BSE-500 universe. The shares gained 11.14% or R12 to close at R123.70. Idea Cellular and Tata Communications,meanwhile,gained 1.29% and 0.69%,respectively. Tata Teleservices (Maharashtra) gained 2.55% to close at R6.04. The current calendar year has seen Reliance Communications and Idea gaining around 68% and 36%,respectively
On Monday,the telecom regulator,while announcing that the new caps will be effective from July 1,acknowledged the costs involved and recognised the telcos aversion to the Home Price Rule regime prescribed in National Telecom Policy 2012,which declared the intent to free up roaming services. This came as a big relief to the telecom operators who were expecting the worst as telecom minister Kapil Sibal had been advocating free roaming.
According to brokerages,the revised tariff structure will not have much of an impact on the bottom-line of the network providers. Ambit Capital,in a note,observed that the new tariff order would only marginally affect the revenues as the current tariff for most operators is already at the newly mandated rates. A cap of R0.75/min on incoming voice calls may bring down the revenues of GSM operators by 1-1.5% in FY14Q2… However,the likely expansion in roaming traffic should dilute the full impact, stated the report.
Market experts also say that the new rates will benefit the operators in terms of business and productivity. The subscriber base in India has increased because of low-cost services. Although,initially operators may feel the pinch of lower tariff,the roaming usage will go up. Lower tariffs will also boost productivity, says A K Prabhakar,senior vice-president (equity research),Anand Rathi Securities.
Interestingly,Bharti Airtel was the only exception within the telecom space,shedding 1.67% to close at R291. Shares of the Bharti group company have lost 8% in the current calendar year.
