Telecom stocks in demand

Shares of five telecom firms rose by 1.09% to 3.80% at 10:30 IST on BSE on reports that a government panel has recommended allowing complete foreign ownership of telecom companies.

Tata Teleservices (Maharashtra) (up 2.98%), Bharti Airtel (up 1.56%), and MTNL (up 1.09%), edged higher.

Reliance Communications (RCom) rose 3.80% to Rs 128.40. The stock hit a 52-week high of Rs 128.95 in intraday trade today, 18 June 2013.

Idea Cellular rose 1.98% to Rs 144.30. The stock hit a 52-week high of Rs 144.60 in intraday trade today, 18 June 2013.

The BSE Sensex was down 109.40 points, or 0.57% at 19,113.88.

A key panel led by economic affairs secretary Arvind Mayaram has reportedly called for hiking the foreign investment caps in nearly all sectors, including defence and telecom, and permitting automatic approval to proposals entailing 49% foreign equity infusion.

According to reports, the committee, which was set up by Finance Minister P Chidambaram to review the sectoral caps, has suggested that the Foreign Direct Investment (FDI) ceiling in telecom sector be raised to 100% from the existing limit of 74%.

Reports suggested that the proposal will be circulated among the ministries for their comments. Key ministers, notably Finance Minister P Chidambaram and Commerce Minister Anand Sharma, are expected to meet in the first week of July 2013 to finalise the plan.

Meanwhile, Telecom Regulatory Authority of India (TRAI) said on Monday, 17 June 2013, it has reduced ceilings for national roaming calls and SMS and instituted a new regime for providing flexibility to telecom service providers to customise tariffs for national roamers through special tariff vouchers (STVs) and combo vouchers. TRAI has also mandated two types of free national roaming plans to be provided by all telecom service providers. These changes will come into effect from 1 July 2013.

As per the latest (TRAI) mandate, outgoing local call charges, while on roaming, will be capped at Rs 1 per minute from Rs 1.40 earlier, while outgoing STD charges, while on national roaming, have been capped to Rs 1.50 from Rs 2.40 per minute earlier. The ceiling tariffs for incoming calls while on national roaming have been reduced from Rs 1.75 per minute to 75 paise per minute, TRAI said. Outgoing local SMS-es will cost Rs 1, while outgoing STD SMS will cost Rs 1.50. Incoming SMS will remain free of charge. The changes will be effective from 1 July 2013.

India is divided into 22 telecom zones. Currently, subscribers pay an additional fee for making and receiving calls when they are outside their home zone.

Bharti Airtel on Monday, 17 June 2013, announced that it has completed the allotment of 19.98 crore new shares, representing 5% equity stake in the company, to Qatar Foundation Endowment. The shares have been issued at a price of Rs 340 each on a preferential basis for a total consideration of Rs 6796 crore. The allotment marks one of the largest private equity transactions in the history of India, Bharti said. On 3 May 2013, Bharti and Qatar Foundation Endowment had announced a binding agreement for the share sale. As part of the entitlement, QFE is entitled to one seat on the board of Bharti.

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