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Telecom shares dives in flat market

October 8, 2009

Shares of major telecom players plunged on Thursday, pulling the BSE Technology Index down 2.8 percent.

Bharti Airtel, which has a 3.6 percent weightage on the Sensex, dropped over 6 percent in a market that ended marginally up at 16,843. Trade in the counter stood at 8.1 million shares.INDIA-STOCKS/JUMP

The other stocks that took a hit included Reliance Communications (down 6 percent), Idea (down 2.2 percent) and MTNL which dropped 1.08 percent.

Fear of survival and reduced profits loom for GSM operators as new entrants could spark a price war which in turn could squeeze the margins of top players.

The telecom regulator (TRAI) on Tuesday asked operators to bill customers on a per-second basis instead of the per-minute billing. TRAI’s move has already resulted in companies altering their plans which could impact their revenue growth.

Rating agency Fitch has highlighted in a statement that EBITDA margins of existing operators is likely to fall on lower ARPUs in the near term.

In an interview with Reuters, DoCoMo’s senior executive vice president, Kiyoyuki Tsujimura, said his company wants to bolster its services with Tata Teleservices.

Do you think a price war can push shares of major operators further down?

Comments

Reliance scrip was quoting at Rs.2,125/- at 15.25 hrs.but 5 minutes later at Rs.2,102/- .Whodunit?

No prizes for this guess!

Posted by A.Kapoor | Report as abusive
 

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