Business Standard

Telecom stocks surge up to 5% after 2G auction flop show

RCom soars 4.88%, followed by Idea Cellular (3.15%) and Bharti Airtel (2.95%)

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Defying an overall weak stock market trend, telecom stocks today surged by as much as 5% a day after the much-talked about 2G mobile phone spectrum auction virtually flopped.

settled 2.95% higher at Rs 291 after surging nearly 5% during the day on the BSE. closed the day 3.15% higher at Rs 95.05. Reliance Communications soared 4.88% to Rs 63.45.

"Failure of auction of 2G mobile phone spectrum is a big plus for existing telecom players like Bharti, Idea and RCom," CNI Research CMD Kishor Ostwal said.

The surge in telecom stocks was in sharp contrast with an overall weak stock stock market, where the Sensex ended at 18,471.37, down 147.50 points.

"Low participation in 2G auctions was widely expected given high reserve prices as well as other liabilities, like one-time spectrum fee and spectrum reframing, hanging on telecom companies," Angel Broking said in a report.

The 2G mobile phone spectrum auction saw bids worth just Rs 9,407 crore being garnered as per provisional results revealed yesterday evening.

The government was targetting a minimum of Rs 28,000 crore from the sale of 2G spectrum in the GSM band.

The tepid response may, however, upset its efforts to meet the revised fiscal deficit target of 5.3% of GDP.

Overall, the government had budget Rs 40,000 crore as revenue from spectrum sale this fiscal.

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