Business Standard

Telecom stocks take a hit, cut losses later

BS Reporter  |  Mumbai 

A day after the telecom regulator proposed high spectrum prices, the shares of leading telecom operators tumbled in early trade. The losses were later cut on expectations the proposals might not be accepted. Shares of the largest telecom operator, Bharti Airtel, in morning trade fell as much as 7.6 per cent to Rs 289, its lowest level in nearly two years. The fourth-largest player, Idea Cellular, plunged as much as 14.5 per cent, while Reliance Communications, the second largest, declined as much as 3.4 per cent.

The Telecom Regulatory Authority of India (Trai) had proposed a near-tenfold increase in the reserve price for spectrum over what operators had paid in 2008.

Analysts said the recommendation would push up costs and hurt companies’ profitability. The telecom companies and their industry body slammed the move, saying it would kill the industry.

“These recommendations will pose challenges and hurt earnings but the final impact will depend on a number of variables,” said Anand Shanbhag, head of research, Avendus Securities. Telecom stocks, however, managed to cut losses after the sentiment improved slightly on hope the recommendations would not be implemented.

Trai’s proposals are not binding and the government will decide on the final spectrum rules.

“The recommendations are adverse for the entire telecom industry as well as for consumers. This is the third sensational set of recommendations by the — the earlier ones being in May 2010 and February 2011,” said and Vivekanand Subbaram, telecom analysts at MF Global, in a note. “The previous recommendations are yet to be implemented and in our view, the current set of recommendations seem too far-fetched to be implemented,” the duo added.

“We find little logic in spectrum being priced so high. We don’t expect broad-based participation in the upcoming auctions if this pricing happens to be final. We believe the government will have to significantly revisit the pricing recommendations,” said HSBC analyst in a report. shares finally ended two per cent lower at Rs 306. closed 3.72 per cent down at Rs 80, while RComm ended at Rs 80, down 1.35 per cent. Telecom analysts expect the stocks to remain range-bound for some time.

RECOMMENDED FOR YOU

Telecom stocks take a hit, cut losses later

A day after the telecom regulator proposed high spectrum prices, the shares of leading telecom operators tumbled in early trade. The losses were later cut on expectations the proposals might not be accepted. Shares of the largest telecom operator, Bharti Airtel, in morning trade fell as much as 7.6 per cent to Rs 289, its lowest level in nearly two years.

A day after the telecom regulator proposed high spectrum prices, the shares of leading telecom operators tumbled in early trade. The losses were later cut on expectations the proposals might not be accepted. Shares of the largest telecom operator, Bharti Airtel, in morning trade fell as much as 7.6 per cent to Rs 289, its lowest level in nearly two years. The fourth-largest player, Idea Cellular, plunged as much as 14.5 per cent, while Reliance Communications, the second largest, declined as much as 3.4 per cent.

The Telecom Regulatory Authority of India (Trai) had proposed a near-tenfold increase in the reserve price for spectrum over what operators had paid in 2008.

Analysts said the recommendation would push up costs and hurt companies’ profitability. The telecom companies and their industry body slammed the move, saying it would kill the industry.

“These recommendations will pose challenges and hurt earnings but the final impact will depend on a number of variables,” said Anand Shanbhag, head of research, Avendus Securities. Telecom stocks, however, managed to cut losses after the sentiment improved slightly on hope the recommendations would not be implemented.

Trai’s proposals are not binding and the government will decide on the final spectrum rules.

“The recommendations are adverse for the entire telecom industry as well as for consumers. This is the third sensational set of recommendations by the — the earlier ones being in May 2010 and February 2011,” said and Vivekanand Subbaram, telecom analysts at MF Global, in a note. “The previous recommendations are yet to be implemented and in our view, the current set of recommendations seem too far-fetched to be implemented,” the duo added.

“We find little logic in spectrum being priced so high. We don’t expect broad-based participation in the upcoming auctions if this pricing happens to be final. We believe the government will have to significantly revisit the pricing recommendations,” said HSBC analyst in a report. shares finally ended two per cent lower at Rs 306. closed 3.72 per cent down at Rs 80, while RComm ended at Rs 80, down 1.35 per cent. Telecom analysts expect the stocks to remain range-bound for some time.

image
Business Standard
177 22

Telecom stocks take a hit, cut losses later

A day after the telecom regulator proposed high spectrum prices, the shares of leading telecom operators tumbled in early trade. The losses were later cut on expectations the proposals might not be accepted. Shares of the largest telecom operator, Bharti Airtel, in morning trade fell as much as 7.6 per cent to Rs 289, its lowest level in nearly two years. The fourth-largest player, Idea Cellular, plunged as much as 14.5 per cent, while Reliance Communications, the second largest, declined as much as 3.4 per cent.

The Telecom Regulatory Authority of India (Trai) had proposed a near-tenfold increase in the reserve price for spectrum over what operators had paid in 2008.

Analysts said the recommendation would push up costs and hurt companies’ profitability. The telecom companies and their industry body slammed the move, saying it would kill the industry.

“These recommendations will pose challenges and hurt earnings but the final impact will depend on a number of variables,” said Anand Shanbhag, head of research, Avendus Securities. Telecom stocks, however, managed to cut losses after the sentiment improved slightly on hope the recommendations would not be implemented.

Trai’s proposals are not binding and the government will decide on the final spectrum rules.

“The recommendations are adverse for the entire telecom industry as well as for consumers. This is the third sensational set of recommendations by the — the earlier ones being in May 2010 and February 2011,” said and Vivekanand Subbaram, telecom analysts at MF Global, in a note. “The previous recommendations are yet to be implemented and in our view, the current set of recommendations seem too far-fetched to be implemented,” the duo added.

“We find little logic in spectrum being priced so high. We don’t expect broad-based participation in the upcoming auctions if this pricing happens to be final. We believe the government will have to significantly revisit the pricing recommendations,” said HSBC analyst in a report. shares finally ended two per cent lower at Rs 306. closed 3.72 per cent down at Rs 80, while RComm ended at Rs 80, down 1.35 per cent. Telecom analysts expect the stocks to remain range-bound for some time.

image
Business Standard
177 22

Upgrade To Premium Services

Welcome User

Business Standard is happy to inform you of the launch of "Business Standard Premium Services"

As a premium subscriber you get an across device unfettered access to a range of services which include:

  • Access Exclusive content - articles, features & opinion pieces
  • Weekly Industry/Genre specific newsletters - Choose multiple industries/genres
  • Access to 17 plus years of content archives
  • Set Stock price alerts for your portfolio and watch list and get them delivered to your e-mail box
  • End of day news alerts on 5 companies (via email)
  • NEW: Get seamless access to WSJ.com at a great price. No additional sign-up required.
 

Premium Services

In Partnership with

 

Dear Guest,

 

Welcome to the premium services of Business Standard brought to you courtesy FIS.
Kindly visit the Manage my subscription page to discover the benefits of this programme.

Enjoy Reading!
Team Business Standard