Comments
The Telecom Regulatory Authority of India’s recommendations for a major reduction in the base price of 2G airwaves used by GSM operators across spectrum bands has propelled the stocks of frontline telecom companies Bharti Airtel and Idea Cellular.
A reduction of between 50 and 60 per cent is envisaged in the base price of 2G spectrum in the 900 MHz and 1,800 MHz bands.
Reacting to the development, Bharti Airtel closed 8.15 per cent higher at Rs 339 on the BSE on Tuesday. Idea Cellular ended at Rs 167, up 5.56 per cent.
“Clearly, the recommendations are favourable to the existing players who acquired license prior to 2008. This will benefit incumbent players such as Bharti Airtel and Vodafone, who currently own this spectrum. The incumbent operators’ licenses expire in 2014 after which they will have to buy back spectrum through an auction. A higher reserve price would have made the acquisition very expensive,” Angel Broking said in a report.
In a note to investors, Nomura Securities said: “With the lowering of reserve price by 40-70 per cent for 1,800 MHz and 900 MHz bands, the operators can at least turn up for the auctions and find some benchmarks for spectrum renewals starting late-2014.”
The TRAI has brought down the reserve price for the 1,800-MHz spectrum band to Rs 1,496 crore/MHz pan-India. In November, spectrum in this band was sold at Rs 3,900 crore for 1.25 MHz pan-India. In March, the reserve price for four circles, including Delhi and Mumbai, was brought down by 30 per cent but it found no takers. Therefore, TRAI has decided to bring down the price further. Delhi, for example, was priced at Rs 485 crore for each 1.25 MHz slot and now the telecom regulator has proposed to sell this at Rs 175 crore for 1 MHz slot.
Biggest impact
But the biggest impact will be due to the reduction in the 900-MHz band. In March, spectrum in this band was priced at Rs 970 crore for every 1.75 MHz in Delhi and Rs 949 crore for the same amount of spectrum in Mumbai. Now the regulator has proposed to fix the base price at Rs 288 crore for 1 MHz spectrum in Delhi and Rs 262 crore in Mumbai. This will benefit incumbent players such as Airtel and Vodafone, which currently own this spectrum.
adith.charlie@thehindu.co.in
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.