Telecom stocks slide on capital expenditure worries

Three telecom stocks fell by 2% to 6.19% at 13:07 IST on BSE on concerns of increase in debt burden and interest costs as these companies look to add data spectrum in key markets in the upcoming spectrum auction around July 2016.

Reliance Communications lost 2%. Tata Teleservices (Maharashtra) (up 4.22%) and MTNL (up 0.82%) edged higher.

Shares of telecom towers company Bharti Infratel were down 1.35% at Rs 369.55.

Shares of Idea Cellular dropped 6.19% to Rs 112.20 on concerns of increase in debt burden and interest costs after a foreign brokerage reportedly said in a research note that the company may spend about Rs 8627 crore ($1.3 billion) in adding data spectrum in key markets in the upcoming spectrum auction around July 2016.

Bharti Airtel declined 2.15% to Rs 353.05 on concerns of increase in debt burden and interest costs after this same foreign brokerage said in the research note that the company may selectively buy 4G airwaves in the coveted 700 Mhz band in a few circles in the upcoming spectrum auction around July 2016.

Meanwhile, the S&P BSE Sensex was up 117.75 points, or 0.47% at 25,219.48

A foreign rating agency reportedly said that steep base price of Rs 11485 crore/unit for upcoming spectrum auction could exert further pressure on participating telecom companies' balance sheets and cash flow.

Idea Cellular, Bharti Airtel and Vodafone's India unit have been spending heavily to ramp up their 4G networks ahead of the launch of Reliance Jio Infocomm, the telecom unit of Reliance Industries later this year.

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