Shares of telecom firms drop on spectrum worries

Bharti Airtel down 3%, Idea slips 4.6% while RIL was 1.8% lower

Shares of leading mobile carriers slumped on concerns over possible high bidding prices at the spectrum auction next month after eight companies applied to bid, signalling much stronger competition than expected.

Reliance Industries , which bought pan-India 4G telecoms permits three years ago, has also applied to bid in the auction due to start on February 3, surprising some investors.

By getting spectrum, Reliance Industries would be able to launch basic mobile phone services along with its yet-to-be launched 4G venture.

Credit Suisse says Reliance's entry could mean "intense" bidding at the auction, and increase competition in the sector in the longer term.

 

Credit Suisse downgraded Bharti Airtel to "neutral" and Idea Cellular to "underperform" from "outperform", citing the higher-than-expected bid applications as a "negative surprise".

Bharti shares fell 3%, Idea dropped 4.6% and Reliance Communications was 1.8% lower.