Telecom stocks erase early gains; end with sharp losses

Thursday, 13 August,Mumbai: Erasing early gains, telecom stocks on Thursday fell sharply by over 9% in an overall sluggish broader market, even as the government allowed companies to share airwaves in the same band so as to reduce call drops.

Shares of Reliance Communications plunged 9.38% to Rs 60.40 at the BSE.

Bharti Airtel dipped 3.36% to Rs 384.35 and Idea Cellular was down 2.57% to Rs 157.50.

These stocks had gained up to 4% in early trade.

In a bid to ease telecom congestion, the government on Wednesday allowed companies to share airwaves in the same band so as to reduce call drops but did not allow leasing of spectrum.

There was, however, no decision on spectrum trading norms, a prerequisite for consolidation in the sector.

“Fulfilling government’s commitment to improve spectral efficiency and quality of service, which is very essential to fulfill the dream of Digital India, the Union Cabinet chaired by Prime Minister Narendra Modi, gave its approval to

the guidelines on spectrum sharing, arising from the recommendations of the Telecom Regulatory Authority of India (TRAI),” an official release said yesterday.

Spectrum sharing would be allowed only where both the licensees are having spectrum in the same band and leasing of spectrum will not be permitted, it said.

At present, telecom operators are allowed to share passive infrastructure like mobile towers only.

With the Cabinet’s approval, telcos will be able to share their unused spectrum thereby enhancing network quality and reducing operational costs.

Meanwhile, in a highly volatile trade, the Sensex today ended 37.27 points up at 27,549.53.