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Telcos in pain: Experts evaluate sector, AGR hit, BSNL merger

The telecom sector has been in focus after the Supreme Court dismissed the telecom companies' plea in the adjusted gross revenue (AGR) matter. The companies were pointing out some arithmetic calculation errors. In an interview with CNBC-TV18, telecom expert Sanjay Kapoor and Tarun Lakhotia of Kotak Institutional Equities discussed the issue at length.

The telecom sector has been in focus after the Supreme Court dismissed the telecom companies' plea in the adjusted gross revenue (AGR) matter. The companies were pointing out some arithmetic calculation errors. In an interview with CNBC-TV18, telecom expert Sanjay Kapoor and Tarun Lakhotia of Kotak Institutional Equities discussed the issue at length.
“The start of the upcycle is already there and we have seen an improvement in subscriber base and average revenue per unit (ARPU) and consequentially in terms of revenues and EBITDA for all the companies in the last 4-6 quarters,” said Lakhotia.
An important thing that will decide how Bharti’s stock performs over the next 12 months is what stance the government takes on Vodafone-Idea’s liabilities.
Meanwhile, Kapoor said, “Given the current situation (of Vodafone-Idea) the problem is that whatever bailout is possible is dependent on the government and the policies. If the government doesn’t bail them out or the policy doesn’t bail them out, for them to raise money and take care of 18 times EBITDA as their net debt is virtually impossible.”
On BSNL-Vodafone merge, he said, “My take on BSNL, MTNL and where Vodafone stands today is that two wrongs do not make a right. They themselves are jostling and struggling; what do they bring to the table other than some spectrum.”
For the entire discussion, watch the video