Bharti Airtel and Idea Cellular edged down on the bourses on Tuesday after the Government cleared a proposal to allow 4G licence holders to also offer voice calling services, leading to more competition in the telecom sector.

Bharti Airtel slipped 1.94 per cent to Rs 307.75 while Idea Cellular finished marginally down 0.23 per cent at Rs 109.40.

Reliance Communications recovered from its day's low of Rs 69.45 to Rs 73.10 at close of trading session. The stock gained 1.81 per cent from its Monday's close of Rs 71.80.

Competition in the mobile voice segment is expected to intensify with the Telecom Commission allowing Internet service providers with broadband spectrum to offer voice services after paying an entry fee of Rs 1,658 crore.

This decision has a direct bearing on Reliance Industries-backed Infotel Broadband, which had sought the Department of Telecom’s permission to offer voice services on top of its broadband spectrum.

Reliance Industries stock ended up 0.18 per cent at Rs 848.80. The stock had slipped to Rs 835 in the morning session.

If Infotel Broadband agrees to pay the entry fee, then competition will intensify in the voice space which could trigger another round of tariff war.

"RIL has invested heavily in the non-energy businesses of retail and telecom over the last few years ($3 billion invested in acquiring the pan-India 4G licence and over $2 billion in the retail business till date). While both these businesses have the potential to scale up into meaningful revenue contributors for RIL, we remain concerned on the margin profile for both. The Broadband Wireless Access (BWA) business faces headwinds in the form of (i) competition, (ii) lack of adequate device ecosystem, (iii) high spectrum costs," said a recent research report from IDFC Securities.

(This article was published on February 19, 2013)
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