Telecom stocks spurt up to 8.15% on TRAI proposal

Shares of Bharti Airtel jumped 8.15%, while Idea Cellular jumped 5.56% and Reliance Communications rose by 1.65%

Led by Bharti Airtel, telecom stocks today gained as much as 8.15% as sector regulator TRAI recommended a sharp 60% cut in the floor price of mobile phone spectrum for an upcoming auction after two previous sales drew lukewarm response on high reserve price.

Shares of Bharti Airtel jumped 8.15% to Rs 339.10, while Idea Cellular jumped 5.56% to Rs 167 and Reliance Communications rose by 1.65% to Rs 141.80 on the BSE.

"There was a strong buying interest in telecom majors such as Bharti (up 8%) and Idea (up 6%) as TRAI recommended a cut of up to 60% in base prices for upcoming mobile phone spectrum auction," said Milan Bavishi, Head Research, Inventure Growth and Securities.

TRAI made recommendations to the government for the start or base price of auction of spectrum in 900 per megahertz (MHz) and 1,800 MHz bands used by GSM players to offer 2G, which remained unsold after two rounds of auctions in November and March.

It suggested a pan-India reserve price of Rs 1,496 crore per MHz in the 1800 band, down 37% from the base price set in the previous auction, TRAI Chairman Rahul Khullar had said.

The reduction in reserve prices follow the failed March auction, which drew just one bidder.