Eight telecos lose Rs54,000 cr in market-cap

Eight telecos lose Rs54,000 cr in market-cap

New Delhi: Eight publicly-listed telecom firms lost over Rs54,000 crore in their total market valuations past week, amid concerns that Trai’s proposal to make it mandatory for telcos to introduce an option of per second call rates would hit their profitability.

Shares of all major telecom firms tanked on the bourses past week, led by private sector firm Reliance Communication, which fell 21% over the week, as investors feared that bottomlines of companies would be affected in future if the telecom regulator’s proposal on tariff plan is implemented.

On 5 October, at the sidelines of the International Telecommunication Union conference in Geneva, Trai had said it may make it mandatory for telcos to introduce an option of per second pulse along with other tariff plans for clients.

“We may ask all the operators to consider per second pulse as a mandatory tariff option along with their other tariff plans," Telecom Regulatory Authority of India (TRAI) chairman J S Sarma had said.

Following the announcement, the next day telecom stocks tumbled on the stock market and the mood in general remained downcast during the week.

The market cap of eight telecom service providers plunged by Rs54,397.68 crore to Rs2,31,196.16 crore at the end of the week on 9 October, from Rs2,85,593.84 crore on 1 October.

A significant decline was also witnessed by Bharti Airtel whose valuation dropped by over 35,000 crore to 1,30,288 crore at the end of trade on Friday.

Bharti Airtel, the country’s largest telecom operator in terms of subscriber, was ranked as the seventh most valued firm in the country.

Besides, Anil Ambani group firm Reliance Communication lost 4,169 crore from its market-cap after its share lost 21% over the week. Last week the company’s valuation stood at 1,466 crore, down from 65,635 crore it had at the end of trade on 1 October.

“Telecom stocks have witnessed corrections in the past few days. However, there would be no immediate buying in the counter. Market would wait for the next 2-3 quarters to see the impact on profitability. Till then it would remain range- bound," Unicon Financial chief executive G Nagpal said.

Marketmen feels that the scrip would consolidate at the current level as the telecom stocks have been beaten quite a lot in the past few days.

Other major losers in the telecom counter include Idea Cellular, which lost Rs3,534 crore in market-cap after its shares dropped 15% during the week.

Marketmen said though the announced plans indicates good news for customers, it would increase competition among operators and affect their profitability. The share price movement is a reflection of concerns of earnings pressure on these telecom companies, they added.

Other major losers include MTNL ,which lost 522 crore from its valuation, Tata Teleservices Maharashtra ( 31 crore), Tata Communication ( 70 crore), Spice Communication ( 27 crore) and HFCL Infotel ( 5 crore).