Telecom shares rally as RBI eases ECB norms for 2G spectrum bidders

Shares of telecom companies have rallied on the bourses in afternoon deals after the Reserve Bank of India (RBI) has relaxed the external commercial borrowing (ECB) policy for the 2G spectrum auction. Bharti Airtel, Idea Cellular, Tata Communications and Videocon Industries have rallied up 20% on the Bombay Stock Exchange.

“As per the extant policy, eligible borrowers in the telecommunication sector are permitted to avail of ECB for the purpose of payment for spectrum allocation, under the automatic route. Successful bidders of 3G auction were also permitted to make the payment for spectrum allocation initially out of Rupee resources to be refinanced with a long-term ECB under the approval route subject to certain conditions,” RBI said in circular dated November 26.

“Five companies - a unit of Norwegian telecommunications carrier Telenor, Vodafone Group Plc's Indian unit, Idea Cellular, Videocon Telecommunications and Bharti Airtel Ltd - bought airwaves worth a total Rs 9,400 crore in an auction earlier this month. The companies are required to pay by December 1, although they can pay in installments,” the media report suggests.

Among the individual stocks, Videocon Industries has locked in 20% upper circuit at Rs 203 on the BSE. Bharti Airtel has surged 7% to Rs 331 followed by Idea Cellular (up 6% at Rs 101) and Tata Communications (up 5% at Rs 239).