Telecom- the fall of tariff and stock prices

Reliance's "50 paisa for all calls" announcement and TRAI's per second tariff suggestion have brought down all the telecom stocks . The leader Bharti is down almost 23% in 3 days and idea is trading below it's issue price. So, is it an end of all situation for the telecom world?.
Telecom has the widest reach of customers and no one can beat them in reach ( bottom of pyramid). There is a lot of rural penetration left . 3G, Net usage over phone are in their intial years. Banking opportunities are also foreseen for the telecom operators in rural areas ( may be in urban India too).
Tariff war, reduction in ARPU and more competition waiting to jump in are definitely negative factors. But some how I see a great future for telecom.
With reduction in tariff over the years, my bill has never come down and Internet usage over telephone network is going up. So, I see a huge opportunity in these big falls of telecom stocks.
In the long run these companies ought to bounce back strongly. Let's keep our fingers crossed till then . Such chaos mostly provide great opportunities.
should I buy bhart, rcom, idea, MTNL, BSNL at this level? is it a good buy. what returns will telecom give

3 comments:

FinWin said...

Thanks for the article.

May I take privilege to point to small correction.
In lieu of
"... and TRAI's per minute tariff .."
it should be
"... and TRAI's per second tariff ..."

Regards
Vivek

Ideasmoney said...

@vivek..Thanks . article stands corrected now

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