The Telecom Regulatory Authority of India (TRAI) released consultation paper on introducing floor price for telecom operators and also extended the interconnect usage charge regime by a year.

Rajiv Sharma, head of research, SBICAP Securities said some kind of floor pricing would bring a lot of predictability to the business models and attract a lot of investors to the sector from a medium to long-term perspective.

However, implementing a floor price for bundled telco plans would be tricky because there are data bundles and voice bundles, he said.

“We have some kind of floor for voice in terms of termination rates. The other aspect is that some of the operators are running 4G, 2G, 3G, so if you do a cost based approach, it will work out as different cost for all the operators because operators with hybrid network have higher cost of data. Therefore, implementing a floor price is not going to be easy but the way to separate out voice would be to use termination rates and a fair usage policy that we are giving 3000 minutes only. That is how you could separate out voice and then you have a floor for data. It’s going to be tricky but it’s still doable,” Sharma added.

According to him, the floor price process would take a couple of months to implement.

The house is positive on Bharti Airtel. "We had upgraded Bharti to a buy sometime back with a target price of Rs 530. We do see more upsides in case of Bharti," he said, adding both the above events were positive for Bharti and Vodafone-Idea, although they are not positive on Vodafone-Idea. said Sharma

Unless some kind of relief was provided on adjusted gross revenue (AGR) issue, they would not change their stance on Vodafone-Idea, he said.

According to him, there would be more upside for Reliance Industries post tariff hikes by Jio and also because Jio does not have AGR dues. Their target price for RIL is Rs 1,970, he added.

Disclosure

: Reliance Industries, the parent company of Reliance Jio, owns Network 18 that publishes CNBCTV18.com.

First Published:Dec 18, 2019 10:08 AM IST