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Topic : Post Budget investment strategy
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Indian Telecom Professionals

 

Should investors buy telecom stocks ?

Created by : Radha Sundaram, Sales/BD Manager, Bharti Airtel  | 03 02 2010 13:39:20 +0000
Industry : Telecom/ISPFunctional Area : India(Markets)
Keywords : investments. telecom stocks
Activity:  382 views;  last activity : 07 06 2010 20:18:09 +0000

Telecom stocks are among the worst hit in the recent market fall. Apart from the general weakness in the broader market, telcos’ scrips have also witnessed crucial developments in the past three months that have adversely affected their performance. Though there are at least two quarters before telcos can show a stable performance, value-investors may start accumulating some of these stocks given their all-time low valuations.

What has masked this decent performance amidst adverse business scenario is the concern among investors over the future growth potential of the sector.

So, is it worth to invest in telecom stocks?

  
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Top Argument
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Yes, i believe that the investors should invest in the Telecom stocks at this time but for a long term as one may not see some incerese in the telecom stocks in near term.

The telecom stocks have seen a lot of value erroision in the near term but one may see it as buying opportunity. The telecom companies have a lot of opprotunities locally as well as globally. One may go with big telecom companies like Bharti, Idea, Tata. It is a fact that the telecom companies will not be growing at the same pace but they will be growing..
By Japan Shah, Assistant Professor, Oxford School of Management  03 02 2010 16:50:05 +0000
 
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Telecom stocks have undergone major value erosion on the bourses after the tariff war started in late September last year. The scrip of sector leader Bharti Airtel has fallen by 36% since October 1, 2009. The market capitalisation of Reliance Communications (RCOM), the second-largest , has nearly halved, while that of Idea Cellular has fallen by 23% during the same period.

Further, the customer loyalty has been reduced due to the entry of large numbers of players into the market. Govt. policies & stiff competition has made the growth of this sector very slow. Though there is still hope that the sectors will revive its full potential, it is better to invest in other sectors if it is not a long term investment.
By Rashmi Chawla, Cust. Service Manager, Leading Bank  03 02 2010 14:28:19 +0000
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Telecom is a good buy at this point of time.

Yes, as said here by Mr. Manav, I'll go for Tatateservices and hold it for some long time. May opt for " Idea " also. To hold for long time, other costly items of Telecom may not suit  me as I may hurriedly sale those in every gain (greed) and again sale them in every down (panic).
By ASOKE KUSARI, Domestic Private Banking-Executive/Manager, A large leading PSU Bank - India  | 03 03 2010 02:48:17 +0000
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India's telecom sector has shown vast growth rate of over 14 % and this had happened, in spite of the certain amount of monopoly. Telecom is a necessity for the people of India considering that majority of our population live in Rural Areas and they now have a reach, to what I believe is an essential necessity. WLL, GSM mobiles, CDMA and IP services to customers, .increasing competition among players allowed the drastica price reduction, making the mobile facility accessible to the urban middle/lower class. Yes, I see a vast potential for the sector and would invest
By Soorain Vahie, Freelancer, Consulting  | 03 02 2010 17:38:13 +0000
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Telecom stocks like that of Idea Cellular and Tata Teleservices will yield good returns provided they are purchased at significant dips.Hold these shares for 18-24 months with constant monitoring.It is not worthwhile to invest in Bharti Airtel and Reliance Communication as of now.
By Manav B, Head/VP/GM-Marketing  | 03 02 2010 17:38:04 +0000
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Absolutely agree with Radha and it will be a year of M&A's
By Jean Julius Vernal, CIO, AVEVA Group plc  | 03 02 2010 15:27:29 +0000
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Yes,though the telecom industry looks gloomy I think one could go for investments in this sectors. 2010 could be a year of M&A for many telecom companies, both in house & overseas. Investors should take advantage of these mergers and should be patient as the markets will grow slowly.

Thus conditions look good for investing in telecom sector but it should be for a long term.
By Radha Sundaram, Sales/BD Manager, Bharti Airtel  | 03 02 2010 13:39:20 +0000
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I would second Rashmi in the view that the intense competition would make the sector grow at a retarded pace and let's not forget that not only new players but also number portability would be a game changer for the leading players and it would be too difficult to predict that who is going to gain out of all...
By Prassan Kumar Sharma, AVP, Nirmal Bang Securities  | 03 05 2010 21:59:37 +0000
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telecom has done its maximum if 3g is given to pvt players i think we can opt for these shares
By Davies francis, Analyst, self  | 03 04 2010 14:52:43 +0000
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so many people has said yes, they should but it will not grow as much, it will be a long term , it will grow slowly ?

Some said, they will buy on dips and sell on gain .

Hello !!! Lets be crisp/short/meaningful-- as  what should be the criteria to invest in sector for major people ?

  1.  quick money
  2.  good return
  3.  stable co and domain
  4.  less petty transactions

So My view is  go for mutual fund if you have so long horizon or invest here if you are not looking for great returns, invest here if u r ready to watch market daily and keep buying/selling.

lets accept--telCo market has reached in fierce competition and no or less margins and there are so many options so come what 3g- zain- rural- vas- mcommerce------> returns will not so bright so stay away AND ADVISE SAME TO OTHERS or dont keep more 5- 10% of portfolio------ THANKS

 
By Abhishek Gupta, Director , Skills Factory  | 03 04 2010 08:35:33 +0000
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telecom is intense competiton so they nee do reduce tarifs and other fees

in future m&a will happen in telcom
By cmsrinivas , SalesManager-autoloans NBFC  | 03 03 2010 14:13:54 +0000
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Thanks for the referral, but I am not comfortable with the technical aspects.  Currently there is too much competition that due to the tariff war, even well established players are on thin margins. They can be very rewarding once there is consolidation.

 Regarding entrants, it will be prudent to wait till you have an idea how they will break even in the future.  The point of taking advantage of undervaluation is worth considering, but give due importance to the degree of uncertainty prevailing and time required for market correction.

 
By Padmanabhan R, Articled / Audit assistant, Finance student  | 03 02 2010 17:53:44 +0000
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