Telecom stocks weak, cabinet okays spectrum auction

Shares of telecom stocks are under pressure on concerns of high price in bidding for spectrum. The Union Cabinet has approved the proposal to auction 800 MHz, 900 MHz and 1800 MHz spectrum. It has approved the reserve price for 800 MHZ spectrum at Rs3,646 crore Pan-India Per MHz and 900 MHZ spectrum at Rs 3,980 crore. The Cabinet also approved reserve price for 1,800 MHz spectrum at Rs 2,191 crore.

Idea has 92 percent of its 900 mhz holding coming up for auction hence highest risk. Bharti Airtel has relatively less spectrum coming up for renewal.

Reacting to the news, Naveen Kulkarni, Co-Head of Research, PhillipCapital says he was expecting some discount on 900 MHz which could have been fixed at the reserve price of Rs 3600-3700 crore MHz, but currently it is a little higher at Rs 3,980 crore MHz.

The government is aiming to rake in at least Rs 64,840 crore from the sale next month.