Moneycontrol Bureau
Shares of Bharti Airtel, Idea Cellular and Reliance Communication are succumbing to selling pressure as the telecom operators applied for spectrum auction slated for February 3. Bharti Airtel fell 3.3 percent, Idea lost 5 percent while Reliance Communication was down 2.5 percent intraday on Thursday.
The other five applicants include Vodafone, Aircel, Tata Teleservices, Reliance Jio Infocomm and Telewings (Uninor). Tata Teleservice, however, is up around 1 percent on the BSE.
In the last round of auction held in March 2013, none of the GSM operators had bid for radiowaves, citing high reserve or base price.
The cabinet has fixed the base price for sale of spectrum in the 1800 Mhz band for pan-India at Rs 1,765 crore per MHz, about 26 per cent lower than in the March sale. For the 900 MHz band, it approved a rate up to 53 percent lower than the previous auction price. It is Rs 360 crore per MHz for Delhi, Rs 328 crore for Mumbai and Rs 125 crore for Kolkata.
About 403 megahertz of 2G spectrum in the 1800 MHz band and about 45 MHz of spectrum in the premium 900 MHz band is being put up for auction.
The 1800 Mhz band is being put up for auction following the Supreme Court order that the government sell all spectrum that was freed from the cancellation of 122 licences on February 2, 2012 in the 2G spectrum allocation case.
The 900 Mhz is being auctioned in three metros - Delhi, Mumbai and Kolkata - as the current lincences of operators (Airtel, Vodafone and Loop) will expire in November.
Brokerage view
Credit Suisse downgraded Bharti to neutral and Idea to underperform with a target price of Rs 310 and Rs 130 respectively.
“We build 150-250 basis points revenue market share loss for Bharti and Idea over the FY15/FY16 (along with reversal of the recent revenue per minute increases). We also build a step up in capex/sales to 14 percent for FY15/FY16 (from 8 percent LTM run rate and 12 percent assumed earlier),” it said in a report.
At 9:44 am Bharti Airtel was at Rs 321.50, down Rs 10.05, or 3.03 percent, Idea Cellular was at Rs 160.65, down Rs 7.60, or 4.52 percent, Reliance Communications was at Rs 123.80, down Rs 3.00, or 2.37 percent.
(With inputs from PTI)
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