Telecom stocks gain on proposal to cut spectrum auction price

Led by Bharti Airtel, telecom stocks on Tuesday gained as much as 8.15 per cent as the sector regulator recommended a sharp 60 per cent cut in the floor price of mobile phone spectrum for an upcoming auction.

The Telecom Regulatory Authority of India made recommendations to the government for the start or base price of auction of spectrum in 900 per megahertz (MHz) and 1,800 MHz bands used by GSM players to offer 2G, which remained unsold after two rounds of auctions in November and March.

It suggested a pan-India reserve price of Rs 1,496 crore per MHz in the 1800 band, down 37 per cent from the base price set in the previous auction, TRAI Chairman Rahul Khullar had said.

The reduction in reserve prices follow the failed March auction, which drew just one bidder.

Cheering the news, shares of Bharti Airtel jumped 8.15 per cent to Rs 339.10 while Idea Cellular jumped 5.56 per cent to Rs 167 and Reliance Communications rose 1.65 per cent to Rs 141.80 on the Bombay Stock Exchange.

"There was a strong buying interest in telecom majors such as Bharti (up 8 per cent) and Idea (up 6 per cent) as TRAI recommended a cut of up to 60 per cent in base prices for upcoming mobile phone spectrum auction," said Milan Bavishi, Head Research, Inventure Growth and Securities.

Meanwhile, the BSE Sensex shot up 727 points, or 3.77 per cent, to close at 19,997.09.

With inputs from PTI