Telecom stocks decline after aggressive bidding for telecom spectrum auction

Three telecom stocks fell by 0.63% to 3.49% at 12:00 IST on BSE after aggressive bidding was witnessed on day one for auction of 2G and 3G telecom spectrum yesterday, 4 March 2015.

Meanwhile, the S&P BSE Sensex was down 25.27 points or 0.09% at 29,355.46.

Among telecom stocks, Bharti Airtel (down 0.63%), Idea Cellular (down 3.49%), and Reliance Communications (down 0.75%) declined. Tata Teleservices (Maharashtra) rose 0.11%.

Department of Telecommunications said on 4 March 2015 that on day one of bidding, 2G and 3G spectrum auction got bids of around Rs 60000 crore. Aggressive bidding for telecom spectrum auction could adversely affect the operating profits of telecom companies.

Eight firms are bidding to acquire radiowaves in four bands. The government plans to sell 380.75 megahertz (MHz) of spectrum in three bands the premium 900 MHz band, 1800 MHz and 800 MHz, besides in the 2100 Mhz band across 17 out of 22 telecom areas in the country. Spectrum has been put on offer in 15 service areas (SAs) in 1800 MHz band, 17 SAs in 900 MHz bans and 20 SAs in 800 MHz band. The government has put up 103.75 MHz in 800 MHz band, 177.8 MHz in 900 MHz band, 99.2 MHz in 1,800 MHz band which are historically considered 2G bands and 85 Mhz in the 2,100 MHz band, considered the 3G band. Validity of spectrum in this auction shall be 20 years.

Most of the spectrum being put up for the auction is presently held by Airtel, Vodafone, Idea Cellular and Reliance Communications. Their licences are expiring in 2015-16. It is mandatory for these companies to bid for spectrum if they have to continue offering mobile and other telecom services as their permit is expiring.

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