Trai move, price war pull down telecom stocks

Telecom stocks could not recover from their losses even as the market rebounded into the green. Reliance Communications dropped to a low of Rs 262 and finally ended down 11% at Rs 268. The counter clocked a heavy volume of 11.68 million shares on the BSE today.

Bharti Airtel also clocked hefty trade volumes of 14.8 million shares on the BSE. The stock touched a new 52-week low of Rs 350 and ended down 10% at Rs 359.

Idea Cellular plunged to a low of Rs 60 but managed to recover partially and finally ended at Rs 65 - down 8%. Over 11.67 million shares were traded on the counter today.

Tata Communications ended flat at Rs 471 with trades of over 60,022 shares. Tata Teleservices Maharashtra dropped 4% to Rs 32.
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(Updated at 1144 hrs)

Bharti Airtel has slipped further in red and is now down 12% at Rs 352. The counter has witnessed brisk trades of around 7.85 million shares so far on the BSE as against its two-week average traded volume of around 2.41 million shares.

Reliance Communications has tumbled 11.6% to Rs 265. The counter has seen trades of around 7.19 million shares. Idea Cellular has shed 11% at Rs 63.

Tata Communications is down 2.5% at Rs 460, and TTML is down 6.5% at Rs 31.50.
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(Updated at 1036 hrs)

The telecom stocks have been lynched on the bourses today. There is stiff competition in the telecom industry on the pricing front, and now TRAI new move is likely to further dent thier potential earnings.

Telecom companies have been struggling to sustain revenue growth as they go rural and scrape the bottom of the barrel in urban areas. They will be hard pressed to keep their chins up in such an environment.

ARPUs (Average revenues per user) are expected to fall again as the price war is bound to heat up. Mobile number Portability (effective from Jan 2010 in metros and Category A service areas) will force the tariff competition to heat up even in the higher revenue post-paid market where it has been cooler till now.

Based on global experience, subscriber loss may not be significant, according to a Macquarie India wireless report, but the fight to retain subscribers and attract new ones will be fought on a pricing front given that there are many new entrants as well who want to gain subscriber base as quickly as possible.

Bharti Airtel is quoting at Rs 364, down by 9% or Rs 36, after having corrected by 8% yesterday. It opened the day at Rs 403, which was also the day's high, and has touched a low of Rs 360 so far today.

Reliance Communications is quoting at Rs 269, weaker by 10% or Rs 30. It had opened the day at Rs 299; has touched a high of Rs 302 and a low of Rs 263 thus far. Reliance Communications (RCom) has thrown down the gauntlet on the pricing front initiating its flat rate tariff of 50 paise per minute for local, STD and roaming in its new Simply Reliance plan being rolled out today.The plan gets activated with lifetime validity, with a voucher purchase of Rs 48 for pre-paid consumers and Rs 99 for post-paid consumers.

Idea has shed 9% or Rs 6.5 and is quoting at Rs 64.Tata Communications is trading at Rs 459, down by 2.6% or Rs 12. The stock had opened at Rs 473 and has touched an intra-day high of Rs 475 and a low of Rs 456.

Tata Teleservices is quoting at Rs 32, down by 4.6% or Rs 1.5. It had opened the day at Rs 34, which was also the day's high, and has touched a low of Rs 31 thus far.

Further, the Telecom Regulatory Authority of India (Trai) is planning to make the one-second pulse a mandatory tariff option for all operators, a move that will benefit consumers by potentially reducing call charges and adding transparency to their tariff plans.