Shares of telecom giant Bharti airtel fell by nearly 6% in early trade on the BSE today, following a heavy sell-off by investors amid confusion over telecom regulator TRAI's new recommendations on 2G spectrum pricing.
The Telecom Regulatory Authority of India (TRAI) has recommended a six-fold hike in the price of start-up 2G spectrum and has said that every Mhz of additional spectrum (on an all-India basis) beyond the contracted limit of 6.2 Mhz will cost a massive Rs 4,571.87 crore.
Bharti airtel holds extra spectrum beyond 6.2 Mhz and the new norms would impose a huge financial burden on the company. Furthermore, the company will have to pay a hefty amount to renew its licence as per the new norms recommended by TRAI.
Reacting sharply to the development, shares of Bharti airtel slipped by 5.82% to an intra-day low of Rs 313 on the Bombay Stock Exchange.
In a similar fashion, the scrip declined by 5.7% to Rs 313.20 in early trade on the National Stock Exchange.
"The impact of spectrum pricing on cash flows could be severe if the recommendations are accepted, adding to operators' woes due to MNP and 3G-related pressure on business," Edelweiss Research said in a note.
Meanwhile, shares of state-run telecom firm MTNL, which also holds extra spectrum, plummeted by 4.75% to hit a life-time low of Rs 39.05 apiece on the BSE.
However, another private telecom firm, Anil Ambani-led Reliance Communications, staged a smart recovery with a gain of 7.22%, after plunging by nearly 18% yesterday.
Meanwhile, the 30-share benchmark Sensex was down 150.69 points from its previous close at 1049 hours, at 17,442.08.
At 10:36 am, top mobile operator Bharti was down 5.2% and Idea tumbled 11.8%. The main stock index was trading 0.6% lower.
