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Stocks of telecom service providers are seen weak next week on broader concerns surrounding the industry but downside in these shares is limited. There are two broad concerns weighing on the investor sentiment at this point of time. One is what happens to one-time spectrum fee issue and the other is how do the spectrum auctions go in March. The downside is limited though.
On Jan 9, the telecom department had asked the established telecom companies to collectively pay around 200 bln rupees as one-time spectrum fee. The levy on Bharti Airtel Ltd is 52.01 bln rupees, while for Reliance Communications Ltd and Idea Cellular Ltd, it is 1.73 bln rupees and 18.82 bln rupees, respectively, sources said.
Vodafone India will have to shell out 35.99 bln rupees, Loop Telecom Ltd 6.06 bln rupees, state-owned Bharat Sanchar Nigam Ltd 69.12 bln rupees and Aircel Ltd 13.65 bln rupees as one-time spectrum levy.
The Union Cabinet had in November approved two sets of one-time spectrum fee. Operators with spectrum beyond 4.4 MHz are to be charged prospectively for spectrum held beyond that limit based on the market price discovered in the 2G spectrum auction for the remaining period of their licence.
The ministerial panel had also decided to levy a retrospective charge from July 2008 on spectrum held beyond 6.2 MHz to a price indexed to 16.58 bln rupees, the rate paid by an operator for pan-India spectrum in 2001 up to the date of applicability of the auction-determined price. The fee would be annualised based on State Bank of India's prime lending rate.
Various telecom operators have already secured stay orders from various high courts and the Telecom Disputes Settlement and Appellate Tribunal. The spectrum auction will take place from Mar 11 and could further weaken the already-stretched balance sheets of the service providers. If you ignore the regulatory overhangs, the market now has faith that tariffs will further rise and bring some profitability in the sector.
Idea Cellular Ltd recently hiked the base rate of its pre-paid local voice and 2G data services in Mumbai. The hike was effected between Jan 28 and Feb 4.
Last month, Idea, along with Bharti Airtel Ltd and Vodafone India Ltd, withdrew free minutes on its various pre-paid vouchers.
Stocks of telecom service providers are seen weak next week on broader concerns surrounding the industry but downside in these shares is limited. There are two broad concerns weighing on the investor sentiment at this point of time. One is what happens to one-time spectrum fee issue and the other is how do the spectrum auctions go in March. The downside is limited though.
On Jan 9, the telecom department had asked the established telecom companies to collectively pay around 200 bln rupees as one-time spectrum fee. The levy on Bharti Airtel Ltd is 52.01 bln rupees, while for Reliance Communications Ltd and Idea Cellular Ltd, it is 1.73 bln rupees and 18.82 bln rupees, respectively, sources said.
Vodafone India will have to shell out 35.99 bln rupees, Loop Telecom Ltd 6.06 bln rupees, state-owned Bharat Sanchar Nigam Ltd 69.12 bln rupees and Aircel Ltd 13.65 bln rupees as one-time spectrum levy.
The Union Cabinet had in November approved two sets of one-time spectrum fee. Operators with spectrum beyond 4.4 MHz are to be charged prospectively for spectrum held beyond that limit based on the market price discovered in the 2G spectrum auction for the remaining period of their licence.
The ministerial panel had also decided to levy a retrospective charge from July 2008 on spectrum held beyond 6.2 MHz to a price indexed to 16.58 bln rupees, the rate paid by an operator for pan-India spectrum in 2001 up to the date of applicability of the auction-determined price. The fee would be annualised based on State Bank of India's prime lending rate.
Various telecom operators have already secured stay orders from various high courts and the Telecom Disputes Settlement and Appellate Tribunal. The spectrum auction will take place from Mar 11 and could further weaken the already-stretched balance sheets of the service providers. If you ignore the regulatory overhangs, the market now has faith that tariffs will further rise and bring some profitability in the sector.
Idea Cellular Ltd recently hiked the base rate of its pre-paid local voice and 2G data services in Mumbai. The hike was effected between Jan 28 and Feb 4.
Last month, Idea, along with Bharti Airtel Ltd and Vodafone India Ltd, withdrew free minutes on its various pre-paid vouchers.
