100% FDI good news for foreign telecom operators: Harit Shah, Nirmal Bang

In an interview with ET Now, Harit Shah, Senior Research Analyst-Telecom, Nirmal Bang, gives his views on telecom stocks. Excerpts:



ET Now: Speaking of 100% FDI in telecom, the sentimental impact could be big, but the material impact in the near term may not be all that large.

Harit Shah: This is potentially a starting point. The move will be good for foreign operators who already have a presence in India, like Vodafone or Sistema. These companies can pump in more funds based on logistical requirements. As far as listed players are concerned, I do not necessarily think that there should be any immediate impact probably for an Idea or Bharti. RComm has reportedly been in talks with a few companies for a stake sale, but given the fact that this has been happening for the last five or six years without any real transaction taking place, we would wait until something actually materialises. The government may be hoping to see some foreign players participate in the 2G auction. So that will also give them more revenue. It will increase competition, but given the fact that the market is highly competitive and current regulatory issues still have not been resolved, it remains to be seen as to how much actually you see incremental foreign operators entering the market.

ET Now: What is your rating on Idea, Bharti and Reliance Communications?

Harit Shah: We currently have a negative sell rating on Idea. We need to see as to what exactly the government decides regarding the licence renewals. For Bharti we have a ‘hold’ at this point in time. We have a Rs 340 target price. The valuations at Bharti are relatively more attractive than Idea. We have a ‘hold’ rating at this point for Reliance Communications.