Telecom stocks slide 7% on fierce bidding fears as R-Jio joins 2G race

Investors worry Reliance Jio’s participation in auction will hurt telcos’ profitability.

New Delhi | Published: January 17, 2014 2:00:58 am

Telecom stocks today witnessed intense selling pressure, falling as much as 7.3 per cent, amid concerns that Reliance Jio Infocomm’s participation in the upcoming spectrum auction will hurt market share and profitability of telcos.

Shares of Idea Cellular plummeted 7.25 per cent, while Bharti Airtel plunged 4.84 per cent. Similarly, Reliance Communications tanked 4.18 per cent and Tata Teleservices fell by 3.3 per cent on the BSE. “Telecom stocks fell amid worries that Reliance Jio Infocomm’s participation in the upcoming spectrum auction will hurt the market share and profitability of telcos,” said Paras Bothra, research head, Ashika Stock Brokers.

Echoing similar views, Rakesh Goyal, senior vice president, Bonanza Portfolio Limited said: “Telecom stocks fell by 4-7 per cent post concerns raised over Reliance Jio Infocomm partnership, which can be negative for the telecom companies.” Bharti Airtel, Vodafone and a surprise entrant Reliance Industries are among the 8 telecom operators that have applied for bidding in the next month’s spectrum auction through which the government is expecting at least Rs 11,300 crore.

Tata Teleservices, Idea Cellular and Anil Ambani Group’s Reliance Communications were the other prominent firms to apply at the close of applications yesterday. The application by Mukesh Ambani-led RIL’s telecom arm, Reliance Jio Infocomm Ltd came as a surprise as the company is working to launch 4G wireless broadband services soon. About 403 megahertz of 2G spectrum in the 1800 MHz band and 46 MHz of spectrum in the premium 900 MHz band is being put up for auction.

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