Last February 22, President Rodrigo Duterte signed into law Republic Act 10972 extending the congressional franchise of Now Telecom, for the rebuilding of a telecommunications network. The said extension is twenty five (25) years ending on 2043. The above-mentioned law grants the company the power to construct, establish, operate and maintain mobile radio systems. It also gives the company the same privileges to that of existing players in the industry. Presidential Communications Secretary Martin Adanar will ask the third telecommunications player to sign an agreement that it will not sell out to its two existing competitors –PLDT Inc. and Globe Telecom Inc.
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Now Telecom wishes to be the third telecommunications firm in the country. The President, being disappointed by the poor performance of the country’s present telecommunication firms, decided to open doors for other companies that can provide better service. Now Telecom hopes to be the third telecom firm in the Philippines. The Department of Information and Communications Technology (DICT) has set the bidding deadline on May 18, 2018. The DICT also announced the requirements in order to be considered in the bidding. The firm must have already secured a telco franchise and such franchise should be valid until December 31, 2023. It must also have a net worth of at least P10 billion and must be at least 60% owned by Filipinos. It must have no liabilities with the National Telecommunications Commission based on the draft terms issued by DICT. Lastly; the participating firm should not be related to firms whose 40% market share is in the mobile and broadband wireless. One relevant inclusion in the provisions of R.A. 10972 is mobile number portability. Meaning, subscribers can now maintain one mobile number in their lifetime. This basically points to the idea that individuals can be easily monitored including transactions made.
The public was generally enthusiastic when they heard about a new player entering the market. There have been numerous complaints with the performance of existing telecommunications companies and they have always been dismayed due to delay and inaction. Now, upon the entering of a third player in the industry, this will force the firms to upgrade their system or else, they will be left behind the market. The two existing telecommunications firms are currently enjoying a big chunk of the market share since duopoly has been long accepted. The entry point of another player will mean a new structuring of those companies’ bottom line figure and projections made by its finance department. Despite the negative impact on them, this basically benefits the public in many ways. First, better services can be provided at an affordable and reasonable rate. Second, this breaks the long-time practice of duopoly.
The news item may be positive but again this has no impact yet on the display of earnings of the company. The techncials is also showing a different story for the past seven trading days. As of February 26, 2018, NOW has failed to breakout of the 17 price range. Because of that, it further triggered a retracement downward, the stock is now at 13.70 due to its failure to breakout of the 17 price range. Should the selling continue you may expect the stock to go down further to the closest possible support.
The closest possible support can be pegged at 13, should the stock fail to hold 13, this could trigger a sell signal for quick traders with a more aggressive outlook. Should it fail to hold 13, the stock could possibly retrace to the next support at 10. While the strongest support is at 7 as of this point in time. This is still a great way off, that’s why it would be prudent not to buy based on emotions or just because of the having the fear of missing out.
For position traders, a lot of the trend indicators are still showing an uptrend. With that there is still no sell signal yet for position traders. I’ll keep you posted should there be any indicator of a trend reversal. Again your goal as position traders is to maximize your gains until the charts say that the trend is over!
So far the only sell signal we have is for quick traders with a more aggressive outlook. The key indicator to look at is the failure to breakout of 17 and the second parameter will be if it fails to hold 13.
At the end of the day, whatever movement that we have for NOW is still based on sentiment and market action. There is not fundamental display of consistent earnings. This is still just based on speculation of what this stock could be in the future. So as of this point, this stock is still just for trading and not investing. That’s why you have to sell when sell signals emerge no matter how positive the news may look like.
I hope this helps you in your trades! Excited to see you all this weekend for Stock Smarts Manila!