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Telecom stocks hog limelight

(The Hindu Business Line 25th April 2008)The telecom sector saw renewed buying interest on Friday, after going through major corrections during the market meltdown that started in January. Bharti Airtel gained 9.61 per cent to close at Rs 925.30.
During the intraday trade, the scrip gained more than 11 per cent, touching a high of Rs 941.90. Reliance Communications shares surged 8.31 per cent or Rs 44.25 from its previous close to end the day at Rs 577.05. Idea Cellular rose 4.47 per cent to close at Rs 107.55. Among other telecom stocks that gained were, Spice Communications (1.15 per cent), MTNL (3.31 per cent), Tata Teleservices Maharashtra (4.23 per cent) and Tata Communications gained 1.48 per cent. Subscriber additions

Telecommunications analysts say that the sector has received a shot in the arm from the strong numbers declared by the heavy weights in the sector. “Strong subscriber additions, declining losses and improved usage are some of the positives for this sector now,” said Mr Alex Mathew, Head-Research Centre, Geojit Financial services Ltd.
The Aditya Birla group’s Idea Cellular reported a 45 per cent rise in its quarterly net profit on Thursday. Bharti Airtel today reported a 44 per cent increase in fourth quarter consolidated net profit at Rs 1,898.85 crore compared with Rs 1,318.56 crore reported in the corresponding quarter of the previous year.
Marketmen are looking forward to equally good results from Reliance Communications too by the end of this month. Mr Sanjay Someshwar of Ventura Securities says that another factor could be the news of Reliance Infratel coming out with an IPO. He says that, with the markets looking better now, the company might announce the IPO soon.3G spectrum
A further boost to the telecom scrips came from the reports that the Telecom Regulatory Authority of India (TRAI) was to submit a recommendation to bar non-telecommunication licence holders from bidding for 3G spectrum. “This move rules out the prospect of foreign player from entering our markets, which means less competition for the domestic players. It is positive for Bharti Airtel, Reliance Communications and Idea Cellular,” said a telecom analyst with a brokerage.
The news of state-run telecom major BSNL planning to hive off the infrastructure business could have also enhanced the buying interest in the telecom counter, say analysts.
“BSNL, which has signed an agreement with six infrastructure providers to rent mobile towers from firms, including GTL Infrastructure and Tata Teleservices, is also looking at sharing active infrastructures like backhaul with private companies. Private telecom providers could benefit from this move, because they could buy or lease the infrastructure from BSNL, which could reduce their capital expenditure,” said the head of research at a brokerage.

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