Players happy, stocks steady

The FDI hike received a mixed and rather lukewarm response from the market. The Bharti Televentures stock ended down 1.5 per cent at Rs 219....

The FDI hike received a mixed and rather lukewarm response from the market. The Bharti Televentures stock ended down 1.5 per cent at Rs 219.05 despite the move effectively clearing the way for an American Depository Receipts (ADR) listing by the telecom major which had been held up because Bharti had already hit the 48 per cent FDI mark. The stock of Tata Teleservices (Maharashtra), though, gained Rs 3.95 to close 13 per cent higher at Rs 33.7.

But the Bharti stock has gained over 10 per cent from Rs 198.3 on Monday last week, possibly on expectation of this proposal being cleared. But more reflective, perhaps, is the response from corporates in the sector, who have cheered the move. Most players see it as a move that will attract more investment in the sector as well as greater interest from foreign telecom majors.

BSNL CMD A.K. Sinha said, ‘‘It’s good for the sector, if we get more capital. Greater capital means expansion of the sector.’’ Echoing the sentiment, Bharti Televentures MD Rajan Bharti Mittal said: ‘‘The industry will get the much-needed capital to deliver on its target of reaching between 200 and 250 million phone connections over 3 years.’’ For the customer, he added, ‘‘it will drive faster accessibility to what the world has to offer in the latest telecom technology.’’

The other implication is likely to be greater interest from telecom majors and speedier consolidation in the sector. There has been talk for a while now that wireless majors like Vodafone and Telenor are keen on investing in India. Analysts say the time is now right for them to take a closer look at this market. ‘‘The increase in FDI is in keeping with the whole theme of rationalisation and simplification. M&A activity will pick up,’’ said NM Rothschild (India) MD Munesh Khanna.

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