PSU bank stocks lose ground on telecom exposure

PTI Mumbai | Updated on February 02, 2012

Shares of public sector lenders, including SBI and Punjab National Bank, fell on the bourses on Thursday on concerns about their telecom sector exposure in the wake of a Supreme Court verdict cancelling as many as 122 2G licences granted by former telecom minister A Raja.

However, many of the stocks pared their losses towards the end of the trading session.

As per the RBI data, banks’ exposure to telecom sector has increased nearly 3-times from about Rs 30,000 crore in 2008 to Rs 90,000 crore currently. It had even crossed Rs 1,00,000 crore mark at the beginning of the current fiscal.

Public sector banks have the maximum exposure, followed by the foreign banks and new private sector banks, while old private sector banks have the least exposure to the sector.

SBI which had lost nearly 5 per cent during the day, trimmed most of the losses and ended at Rs 2,072.65, down 0.21 per cent on the BSE.

PNB, too saw profit booking at its counter and settled for the day 0.21 per cent lower at Rs 953.50.

“Sentiment dampened after the Supreme Court judgement and banking stocks recorded sharp declines on fear of exposure to the affected telecom companies,” Mr Vikas Vardhan AVP Research Motilal Oswal Securities said.

Several lenders, including State Bank of India, Punjab National Bank, IDBI Bank have extended credit to the telecom companies whose licenses have been cancelled.

SBI has fund based exposure of Rs 1,100 crore in telecom companies affected by the apex court order.

“I don’t think we will be affected much by the the verdict. We have a fund-based exposure of Rs 1,100 crore in five accounts, while another Rs 3,400 crore are non-fund based, which is based on a guarantee of roll-out. Now that the licences are cancelled that guarantee is not fulfilled,” SBI Deputy Managing Director Mr Santosh Nair said.

The 122 licences were given by Raja for over Rs 9,000 crore, while 3G auctions for a smaller number of licences had fetched the government a sum of Rs 69,000 crore.

The companies that are set to lose on account of the cancellation of the licences are Uninor (joint venture between Unitech and Telenor of Norway), Loop Telecom, Sistema Shyam (joint venture between Shyam and Sistema of Russia), Etisalat DB (joint venture between Swan and Etisalat of UAE), S Tel, Videocon, Tatas and Idea.

Among the 122 licences issued by Raja in January 2008 on first-come first-serve basis, Uninor was alloted 22 pan India licences, Loop 21, Sistema-Shyam 21, Etisalat-DB 15, S Tel 6, Videocon 21, Idea 9 and Tatas 3.

The BSE barometer Sensex closed 131.27 points higher at 17,431.85.

Published on February 02, 2012

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