Shares of Indian mobile carriers rally on hopes of spectrum price cut
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Telecom shares in Indian mobile network operators rallied on Tuesday with Bharti Airtel Ltd rising as much as 9.3 percent to the highest level since Feb. 1, on hopes the government will be forced to cut the reserve price for airwaves after just one potential bidder emerged for a $7.9 billion spectrum sale next month.
The Indian mobile unit of Russian conglomerate Sistema was the only bidder for the CDMA band airwaves and there was no applicant for the dominant GSM bands that account for close to 85 percent of the spectrum being put on the block.
Leading carriers Bharti Airtel and the Indian unit of Vodafone Group Plc, which are required to bid for airwaves in the premium 900 megahertz band to renew their permits in some key zones, stayed away from bidding after challenging the auction in a court.
"Earlier the expectation was these operators will be compelled to bid," said a Mumbai-based telecommunications analyst at a foreign bank. "Now that they did not bid, it is almost certain that the prices will have to come down," said the analyst, who did not want to be named as he is not authorised to speak to the media.
Carriers mostly shunned another auction in November, saying the minimum bid price for the airwaves was too high, forcing the government to cut prices by about 30 percent in some key zones. That cut was not sufficient, the industry says.
Bharti Airtel would have had to pay about $1.4 billion at the current reserve price to buy back the premium band airwaves in the Delhi and Kolkata service areas, according to an estimate by BNP Paribas.
Bharti Airtel shares were trading 4.2 percent higher at 320 rupees as of 0429 GMT, while shares in Idea Cellular Ltd , India's third-biggest mobile carrier by revenue, were up 3.2 percent at 117.3 rupees.
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