Telecom sector looks attractive: Devesh Kumar

In a chat with ET NOW, Devesh Kumar, MD & Country Head, CIMB Securities, shares his view on the telecom sector.


ET Now: You are bullish on telecom. So what exactly is your call anchored around? Are you bullish on the environment, the policy regime or the competitive landscape?

Devesh Kumar: In telecom, as far as the policy regime is concerned, TRAI recommendations in recent times have been more pragmatic. If you look at pricing on that, expectations from all sides have been tapered off. If we look at the playing field in terms of spectrum allocation, there will be renewal or there will be fresh bidding.

On all that clarity has emerged and if you look at consolidation, in terms of subscriber base, that also is taking place. So the strong players are bound to become bigger and stronger and profitability will come back to this sector going forward and that is where we are bullish on the sector.

In addition if you look at data usage, that is the new side which is emerging as a growth area for telecom companies and month on month if you look at the growth and data usage, that is very encouraging and that will also bring in a new dimension. So voice and data this twin play will bring profitability to the sector.

Coming to other sectors, we feel that in this space, firstly, monsoon has been good, so rural demand should be good and that is good for two wheelers. Then there would be elections in four states followed by the national elections. That again will create a lot of demand for two wheelers and UVs. So in this space, we feel that demand side will remain good and there could be temporary setbacks but by and large, this sector will enjoy good demand.