Bearish on Reliance Communications: Deven Choksey

In a chat with ET Now, Deven Choksey, MD, KR Choksey Securities, gives his stock call.

ET Now: On Reliance, do you think the big overhang is the concern that they may quite aggressively bid for the upcoming 2G auctions on Feb 14?

Deven Choksey: I do not think so because even if they have to aggressively bid for the 2G spectrum. I do not think that the amount of money vis-à-vis the total cash that they have would be significant. At the same time, it is just a strategy as I see it. Basically by coming into the 2G spectrum space and probably asking the other telcos to pay more, one would easily argue that the bleeding would start with many of the telcos if they also end up getting into the aggressive mode of bidding the spectrum.

So it is more of a damage coming into the other telcos vis-à-vis going into Reliance. It may be a strategy through which they may probably want to launch their 4G business very aggressively and systematically. So I would not think that it is an overhang. I believe that at some point of time, this is going to pay off very rich dividend because they are going to have a unified license which is basically going to offer the data and the voice simultaneously on the same bandwidth but this is going to be a plus point for Reliance.