Bharti, MTNL Scrip Battered
Nitin Mathur
financialexpress.com
New Delhi, December 27: As Reliance takes the telecom battle to their doors, Bharti Televentures and Mahanagar Telephone Nigam Ltd (MTNL) have received a heavy battering on the bourses. The hammering in these stocks is close on the heels of Reliance’s aggressively priced WLL-based telecom services launched on December 27, according to broking sources.
Bharti and MTNL, which have a major stake in the Delhi market, have plummeted 12.11 and 6.29 per cent respectively, in the past five trading sessions. On the other hand, Reliance has surged 3.13 per cent during the period.
“The business of Bharti is expected to decline by about 25 per cent with the launch of Reliance’s service,” said Arun Gupta of OJ Financials, a Delhi-based share cum investment broking firm.
According to Gagan Banga of Indiabulls, “The WLL-based telecom service from Reliance is expected to make a dent in the growth rates of existing cellular and basic telephony companies in the region, like Bharti and MTNL. In the longer term, the new service provider may nibble into the existing client base of these companies.”
Both Bharti and MTNL emerged as the top losers among the constituents of the Bombay Stock Exchange (BSE) Teck index on Friday. While the former plummeted 4.05 per cent to close at Rs 22.50, the latter slumped 3.17 per cent to end at Rs 99.15.
“The decline in stock prices has been sharp after the Supreme Court’s decision, which has gone against cellular operators, as the court allowed CDMA-based WLL services,” Mr Gupta said.
According to Mr Banga, “Cellular players like Bharti can offer only GSM technology, which is actually costlier than Reliance’s service.”
An online broking source agreed, “This is the first time we are witnessing a first mover disadvantage as far as cellular operators are concerned as their costs are higher due to the hefty licence fee they have paid,” adding that, “Not more than 10 per cent of cellular subscribers today use the roaming facility which cannot be offered by Reliance. For the remaining 90 per cent, it does not make much difference whether to go for Reliance’s service, which is also cheaper, or to stay with their cellular operator. So we can see a lot of disconnections with the cellular operators.”
As a result, Reliance surged to Rs 306.35 on Friday, before closing lower at Rs 298.25 on profit-booking. |
