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Telecom stocks are expected to tail the broad market, which is seen trading positively next week aided by recovery in the rupee against the dollar. Overall sentiment for the stocks will also remain positive after Telecom Regulatory Authority of India this week decided to cut the reserve price for the 1,800 MHz bandwidth by 37% and for the 900 MHz bandwidth by 60%. We believe TRAI's recommendations are significant positive for Indian telecom operators and industry. Moreover, the regulator had also recommended that the government put in place a uniform spectrum usage charge of 3% of the company's annual adjusted gross revenues. Currently, the spectrum usage charges
are in the range of 2-8%. The sizable reduction in spectrum reserve price, lower spectrum usage charges, positive stance on spectrum trading and exploring the alternative of awarding 800 MHz spectrum to GSM players-these are all positives for the GSM players. Idea and Bharti are likely to be beneficiaries. The regulator had also recommended that in the upcoming auction, the 800 Mhz or CDMA bandwidth should not be placed for auction. Reliance Communications provides its services on the CDMA bandwidth. TRAI's recommendation of not auctioning 800 MHz spectrum might cause disappointment for CDMA players.
Telecom stocks are expected to tail the broad market, which is seen trading positively next week aided by recovery in the rupee against the dollar. Overall sentiment for the stocks will also remain positive after Telecom Regulatory Authority of India this week decided to cut the reserve price for the 1,800 MHz bandwidth by 37% and for the 900 MHz bandwidth by 60%. We believe TRAI's recommendations are significant positive for Indian telecom operators and industry. Moreover, the regulator had also recommended that the government put in place a uniform spectrum usage charge of 3% of the company's annual adjusted gross revenues. Currently, the spectrum usage charges
are in the range of 2-8%. The sizable reduction in spectrum reserve price, lower spectrum usage charges, positive stance on spectrum trading and exploring the alternative of awarding 800 MHz spectrum to GSM players-these are all positives for the GSM players. Idea and Bharti are likely to be beneficiaries. The regulator had also recommended that in the upcoming auction, the 800 Mhz or CDMA bandwidth should not be placed for auction. Reliance Communications provides its services on the CDMA bandwidth. TRAI's recommendation of not auctioning 800 MHz spectrum might cause disappointment for CDMA players.
