Telecom shares fall on brokerage downgrades

Idea Cellular,Bharti Airtel, RCom and Tata Communications are down 2-6% on the Bombay Stock Exchange.

Shares of telecom companies are under pressure trading lower by up to 6% after analyst at foreign brokerage house Credit Suisse downgrades Ideal Cellular and Bharti Airtel citing reasons that Reliance-Jio joining spectrum auctions is a “negative surprise,” against market expectation.

Reliance Jio Infocomm made an application to bid for spectrum in the 900-MHz and 1,800-MHz bands across the country.

With Reliance Jio’s entry as a prospective bidder, the auction is likely to witness aggressive bidding in key circles, especially Delhi and Mumbai, as incumbent operators such as Bharti Airtel and Vodafone are expected to bid aggressively to retain spectrum in the 900-MHz band, the Business Standard report suggests.

In a note to investors Credit Suisse analyst said that, incumbents could either lose customers or have to take pre-emptive price cuts to retain top end customers who generate bulk of volumes and profitability, the Bloomberg report suggests.

Among the individual stocks, Idea Cellular has tanked over 6% to Rs 157, while Bharti Airtel and Reliance Communications are down 4% each at Rs 318 and Rs 122 respectively. Tata Communications too trading lower by 2.4% at Rs 297 on the Bombay Stock Exchange (BSE).