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Both telcos, govt will make money in next 5 years: Raamdeo Agrawal

The stock market is still betting on telecom players because it expects a revival in the sector, says Raamdeo Agrawal, Chairman of Motilal Oswal Financial Services.

The Dalal Street veteran said both the operators and the government are going to make money from telecom in next five years.

He said telecom has been a story of disaster for last 13 years, as the number of players in the industry went up from three to 17 and then came back to three again. “The telecom sector is going through a flux with respect to cost issues and competition,” he said.

Agrawal was speaking at an event to mark the release of Motilal Oswal’s annual wealth creation report.

BSE Telecom index is up 8.8 per cent in Calendar 2019, largely thanks to a late spurt in Bharti Airtel and Vodafone Idea. Airtel is up 50.87 per cent for this calendar.

Balance sheets of the telecom majors are in a bad shape, as they deal with the Supreme Court ruling on adjusted gross revenue (AGR), which widened the scope of calculating the same and burdened the incumbents with a whopping Rs 1.33 lakh crore statutory dues to be paid by January.

Following the order, Bharti Airtel and Vodafone Idea posted record losses, as they had to set aside funds towards the dues. They, meanwhile, have appealed to the apex court to review its decision. Both telcos said their businesses may not sustain in case there was no support from the government.

Agarwal said he firmly believes the economy would soon recover from the current slowdown. “The slowdown is repairable. It may take 6-8 months,” he said.

India reported the lowest growth in 26 quarters for July-September period at 4.5 percent. Nomura recently said the growth rate may plunge further as it hasn’t bottomed out yet.

Source: Economic Times