Shares of four telecom companies fell by 1.78% to 5.5% at 11:03 IST after Reliance Industries surprisingly decided to join the bidding for upcoming telecom spectrum auction slated for 3 February 2014.
Tata Teleservices (Maharashtra) (down 1.78%), Reliance Communications (down 2.88%), Bharti Airtel (down 4.45%) and Idea Cellular (down 5.5%) edged lower. MTNL rose 0.13%.
Meanwhile, the BSE Sensex was down 51.26 points, or 0.17%, to 21,254.19
Telecom stocks tumbled as the surprise decision of Reliance Industries (RIL) to join the bidding for upcoming telecom spectrum auction slated for 3 February 2014 raised concerns of aggressive bidding in the auction which in turn could have an adverse impact on balance sheet of telecom firms.
RIL will join Bharti Airtel, Idea Cellular as well as the local units of Vodafone Group PLC and Telenor ASA in bidding for bandwidth in the auction in February. The government aims to raise at least Rs 11000 crore through two sets of auctions, one for a national service and another for a portion of bandwidth in Delhi, Mumbai or Kolkata, collectively home to over 32 million Indians.
RIL will bid to operate both nationally and in the three cities. A successful bid would mark the company's re-entry into the phone business after spinning-off its cellphone unit Reliance Communications in 2005, to brother Anil Ambani, as part of the division of the business empire built by their late father, Dhirubhai Ambani.
The auctions are crucial for Bharti and Vodafone India, whose bandwidth usage rights are set to expire in Delhi, Mumbai and Kolkata. Reliance Communications also has permits up for renewal in some regions in November this year. The companies will have to bid successfully in the upcoming auction to continue operations. The rights to use bandwidth last for 20 years. Idea Cellular and the Indian unit of Telenor, are also bidding in the hopes of expanding their services.
The Department of Telecommunications, which will conduct the auctions, will scrutinize the bids and announce the final list of bidders on 20 January 2014.
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