ET Now: What is your view on the telecom sector? It seems that the market has somewhat absorbed the news regarding Rel Jio's launch. Some telecom stocks have put up weight as well. Are you with that sector on a fundamental basis? Would you recommend investing in the pocket?
Deven Choksey: The conventional telecommunication business is up for some change as far as the business model is concerned. The current revenue mechanism that most telecom operators have employed —on average revenue per user ( ARPU) basis, is set to change to subscription business with the entry of Rel Jio.
That would be a big change. Only select leaders would probably survive. But having said that, they too may struggle due to high debt on their balance sheets. If you look at first two of three listed telecom operators, you find a debt of over Rs 60,000 crore.
That is where the problem is. They would probably have less venerability to change into some better business models, which is the requirement of the day. That could possibly bring these companies down at some point of time.
Therefore, unless they infuse fresh capital and capitalise further, which is also looking relatively difficult at this point of time, they may probably not send a good chance to overcome the kind of competitive pressure that is coming in. As such, we do not have the kind of exposure into the conventional telecom businesses.
We would refrain from putting in fresh money into telecom stocks. We would rather wait for Reliance Jio to enter into the market. We believe that Reliance Jio holds the potential to add Rs 1,00,000 crore in Reliance Industries' market capitalisation (Rs 3,21,944.68 at Tuesday's close), going forward. That is where we would like to put more amount of money in and stay invested.
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Deven Choksey: The conventional telecommunication business is up for some change as far as the business model is concerned. The current revenue mechanism that most telecom operators have employed —on average revenue per user ( ARPU) basis, is set to change to subscription business with the entry of Rel Jio.
That would be a big change. Only select leaders would probably survive. But having said that, they too may struggle due to high debt on their balance sheets. If you look at first two of three listed telecom operators, you find a debt of over Rs 60,000 crore.
That is where the problem is. They would probably have less venerability to change into some better business models, which is the requirement of the day. That could possibly bring these companies down at some point of time.
Therefore, unless they infuse fresh capital and capitalise further, which is also looking relatively difficult at this point of time, they may probably not send a good chance to overcome the kind of competitive pressure that is coming in. As such, we do not have the kind of exposure into the conventional telecom businesses.
We would refrain from putting in fresh money into telecom stocks. We would rather wait for Reliance Jio to enter into the market. We believe that Reliance Jio holds the potential to add Rs 1,00,000 crore in Reliance Industries' market capitalisation (Rs 3,21,944.68 at Tuesday's close), going forward. That is where we would like to put more amount of money in and stay invested.
sourceat:
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