What do you think should investors buy telecom stocks ?

[neerajchauhan]

Telecom stocks are among the worst hit in the recent market fall. A part from the general weakness in the broader market, telcos scrips have also witnessed crucial development in the past three months that had adversely affected their performance.

Though there are at least two quarters before telecoms can show a stable performance, value-investors may start accumulating some of these stocks given their all time low valuations. What has masked this decent performance amidst adverse business scenario is the concern among investors over the future growth potential of the sector.

 

[neerajchauhan]

Telecom stocks have undergone major value erosion on the courses after the tariff war started in late September last year. The scrip of sector leader Bharti Airtel has fallen. The market capitalisation of Reliance Communications (RCOM), the second-largest , has nearly halved, while that of Idea Cellular has fallen.


Further, the customer loyalty has been reduced due to the entry of large numbers of players into the market. Government policies & stiff competition has made the growth of this sector very slow.Now we can see a cut throat competition in the the market. Though there is still hope that the sectors will revive its full potential, it is better to invest in other sectors if it is not a long term investment.


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