Bharti complains to TRAI

Fri, 4 Dec 12:30 pm

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After the negative start, markets swung into positive territory during the previous two hours of trade. Buying activity is being witnessed in stocks from the IT and telecom sectors. Stocks forming part of the auto and banking spaces are however amongst the losers on the bourses currently.

The BSE-Sensex and the NSE-Nifty are trading higher by about 100 points and 25 points respectively. The BSE-Midcap and BSE-Smallcap indices are trading firm as well, up by around 0.5% and 1.1% respectively. The rupee is trading at 46.21 to the dollar.

As per a leading business daily, India's largest telecom operator Bharti Airtel has expressed its concerns over the falling tariffs. It is believed that the company has approached telecom regular TRAI, asking it to look into the business models of some its peer group companies, especially those which are offering very low tariff plans. The business daily has rightly termed this move as a "rare display of nervousness" by the company. Terming it as ‘predatory pricing', Bharti's management believes that the current tariff structure is lower than the cost structure of operators, and thus completely unsustainable in the long term. It may be noted that recently, even MTNL added a new intensity to competitive tariffs by announcing a half paise-per-second plan for mobile calls on its 2G and 3G networks in Delhi and Mumbai circles. Indeed, competitors do not seem to be on the same page as Bharti. Another large telecom company's management is reported to have said that its company knows the business and has worked out the economics before its has launched the one-paise-per-second plan. Competition in the telecom sector seems to be heating up with each passing day. Bharti is trading higher on the bourses currently.

IT major Infosys has been selected as one of Wal-Mart's three IT vendors in India for multi-year contracts worth a total of over US$ 600 m. The other two vendors include Cognizant Technology Solutions and UST Global. Interestingly, the value of the contract is said to be roughly equal to the value of all the goods that Wal-Mart sources from India every year. As per reports in a leading business daily, initially the three vendors are expected to earn an annual Rs 2.5 bn to Rs 3 bn each from this contract. Further, the figure is set to grow as Wal-Mart increases outsourcing of work from its main merchandising division. Also, Infosys and Cognizant are expected to garner a larger share of the overall contract. Infosys will be responsible for application development and support part of the project. This is a good development for Infosys as it will be lucrative over the long term for the company to build a relationship with Wal-Mart which is the world's largest retailer and is known to have one of the best logistics application systems in the retail industry. The stock of Infosys is currently trading higher.