Cost pressure: Telecom stocks weaken on higher base price for 3G spectrum

Mumbai: Telecom stocks fell up to four percent today after the government fixed the base price for 3G spectrum auction at Rs 3,705 crore per mega hertz. Reacting to this, Bharti Airtel shares lost 2.8 percent to Rs 363.25 on the BSE. [caption id="attachment_2069915" align="alignleft" width="380"] Costlier spectrum. Reuters[/caption]Similarly, Idea Cellular fell by four percent to Rs 159.30. Eyeing a record-high spectrum sale of Rs 1 lakh crore, the government yesterday fixed the base price for 3G auction at Rs 3,705 crore per mega hertz which itself can fetch over Rs 17,000 crore from this band. Along with the spectrum in 2,100 MHz band, which is used to offer 3G services, the government will also offer second generation or 2G mobile airwaves in three different bands in an auction scheduled for 4 March. While the auction of these 2G and 3G airwaves could garner Rs 82,395 crore at the base or minimum price, sources said the government expects total proceeds to exceed Rs 1 lakh crore. The inter-ministerial panel, Telecom Commission, had suggested a base price of Rs 3,705 crore per MHz as 3G spectrum base price for the auction scheduled for 4 March. The base price suggested by the Commission is around 11 percent higher than what telecom firms paid for in the 2010 auction.It is also 36 percent higher than sectoral regulator Trai's recommendation of Rs 2,720 crore per Mhz. PTI