Telecom stocks dip on 2G spectrum pricing proposals

Extending their losses, telecom stocks today plunged by up to 14.47 per cent after sectoral regulator Trai proposed a steep minimum price for auction of the 2G spectrum.

Idea Cellular slumped 14.47 per cent to Rs 71.20, while Bharti Airtel tanked 7.54 per cent to 52-week low of Rs 289.05 and Reliance Communications lost 3.54 per cent to Rs 78.70 on the BSE. Yesterday, telecom stocks had plunged up to 5.5 per cent.

The Telecom Regulatory Authority of India (Trai) has recommended a base price of Rs 3,622 crore for each megahertz of spectrum at pan-India level, which is around 10 times higher than the price for 2G licences in 2008. According to Trai recommendations, a minimum of 5 Mhz should be allotted, which would mean that a pan-India spectrum in 1800 MHz band will cost Rs 18,000 crore. The reserve price is five times the base price of Rs 3,500 crore for 3G auction.

The proposals have raised industry-wide concerns that, if accepted, they would push up costs and tariffs hitting hard telecom firms as well as consumers.