Telecom shares plunge on 2G spectrum price hike move

April 24th, 2012 - 3:00 pm ICT by IANS  

New Delhi, April 24 (IANS) The share prices of telecom firms fell sharply Tuesday, a day after the regulator proposed a high reserve price for the 2G spectrum to be auctioned.

At the Bombay Stock Exchange, shares of the country’s largest telecom firm Bharti Airtel were trading 3.12 percent lower at Rs.302.90 in the afternoon session. Idea Cellular plunged 3.78 percent at Rs.80.10.

Reliance Communications was ruling 1.29 percent lower at Rs.80.45.

The Telecom Regulatory Authority of India (TRAI) Monday proposed a reserve price of Rs.3,622 crore for the auction of 1MHz of pan-India 2G spectrum in the 1800 megahertz band, as compared to Rs.380 crore in the 2008 sale.

According to operators and sector analysts, if the recommendations are accepted, it would raise costs for players and eventually make mobile telephony more expensive for the subscribers.

Uninor, a joint venture between Norway’s Telenor and India-based Unitech, has said some of these recommendations would create “severe negative impact” on the industry.

“It is up to the political leadership of India now to ensure that the gains of the past few years of affordable phone calls for India’s people are not undone.”

The Cellular Operators Association of India (COAI) and the Association of Unified Telecom Service Providers of India (AUSPI) in a joint statement expressed shock at the recommendations and termed them as being arbitrary, regressive and inconsistent.

The regulator has been formulating recommendations for the auction of 2G spectrum policy in the wake of the Feb 2 Supreme Court order cancelling 122 telecom licences issued in 2008.

The apex court had asked the affected firms to shut shop in four months. At the same time, the court had asked the government to re-distribute these licences to firms through an auction in the due time.

TRAI has said all spectrum to be assigned through the auction process in future shall be liberalised, which means spectrum in any band can be used for deploying any services in any technology.

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