Stocks

Bharti plunges on TRAI's new spectrum pricing proposals

PTI Mumbai | Updated on February 10, 2011

Shares of telecom giant Bharti Airtel fell by nearly 6 per cent in the early trade on the BSE today, following a heavy sell-off by investors amid confusion over telecom regulator TRAI’s new recommendations on 2G spectrum pricing.

The Telecom Regulatory Authority of India (TRAI) has recommended a six-fold hike in the prices of start-up 2G spectrum and has said that every Mhz of additional spectrum (on an all-India basis) beyond the contracted limit of 6.2 Mhz will cost Rs 4,571.87 crore.

Bharti Airtel holds extra spectrum beyond 6.2 Mhz and the new norms would impose a huge financial burden on the company.

Furthermore, the company will have to pay a hefty amount to renew its licence as per the new norms recommended by TRAI.

Reacting sharply to the development, the company shares slipped by 5.82 per cent to an intra-day low of Rs 313 on the Bombay Stock Exchange.

In a similar fashion, the scrip declined by 5.7 per cent to Rs 313.20 in early trade on the National Stock Exchange.

Later in the morning session, the scrip was trading down 5.27 per cent at Rs 314.85 on the BSE and down 5.18 per cent at Rs 314.95 on the NSE.

“The impact of spectrum pricing on cash flows could be severe if the recommendations are accepted, adding to operators’ woes due to MNP and 3G-related pressure on business,” Edelweiss Research said in a note.

Meanwhile, the shares of state-run telecom firm MTNL, which also holds extra spectrum, plummeted by 4.75 per cent to hit a life-time low of Rs 39.05 apiece on the BSE.

However, another private telecom firm, Anil Ambani-led Reliance Communications, staged a smart recovery with a gain of 7.22 per cent, after plunging by nearly 18 per cent on Wednesday.

Published on February 10, 2011

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