Telecom sector cannot give bigger ROE: IDBI Capital

In a chat with ET Now, Sonam Udasi, Head of Research, IDBI Capital, shares his views on telecom sector.

ET Now: What would you do with Bharti, Idea, Reliance Communications?

Sonam Udasi: If the spectrum charges are taken in a phased manner, which telecom companies are demanding, then these stocks will show some respite and sort of rally. But, the sector sector is extremely competitive and there is still cash flows are difficult to come by. There are debts taken. Structurally, this sector cannot give a bigger ROE or ROC going ahead. The much touted 3G and even 4G is giving a similar ARPU that the companies were getting on a 2G, so there is no uptick on the profitability as well. There will be a slight respite, if it is a phased payment, otherwise from a stock valuation perspective this sector has not much to look at. It may be great news for the unlisted players, who are stuck may be a Telenor and that could create big competitive pressures for existing listed players.