Telecom stocks gain on 100% FDI nod; Idea hits record high

Telecom shares gained 1-4 percent in early trade Wednesday after the government has relaxed foreign direct investment (FDI) reforms in 13 sectors including 100 percent in telecom sector.

Telecom minister Kapil Sibal said the telecom sector needs funds to the tune of Rs 5-6 lakh crore in the next five years and removing the FDI cap would help investment flow into the cash starved sector.

Sanjeev Aga, director, Idea Cellular said, "This will help for foreign telcom which are already in India. I do not think there is any telcom in the world which wants to enter India at a 100% ownership right now. So I don't think it is going to be really helpful from any foreign direct investment inflows but who knows in three-to-five years the situation might improve." The stock hit a record high of Rs 163.50, up 3.8 percent.

Reliance Communications shares gained 3.66 percent in morning trade to touch a 32-month high of Rs 151.25 on BSE. CDMA operator said: "100 percent FDI in telecom will enhance value for all stakeholders." A spokesperson of Russian conglomerate Sistema controlled SSTL's said, "Sistema Shyam TeleServices welcomes 100 percent FDI in telecom. The much needed policy decision is a very positive development for the entire industry."

Telecom major Bharti Airtel gained 1.5 percent at Rs 326 in morning trade.12.77

Idea and Bharti shares rallied 16 percent 12.77 percent in five consecutive sessions from last Thursday.

Foreign institutional investors hold 16.76 percent stake in Idea Cellular, 7.95 percent in Reliance Communications and 16.24 percent stake in Bharti Airtel as of June 2013.