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Stocks take a beating on bourses

business Updated: May 12, 2010 23:38 IST
HT Correspondent
HT Correspondent
Hindustan Times

The bourses reacted sharply to the recommendations of the Telecom Regulatory authority of India (TRAI) on 2G spectrum licensing, with the share prices of two leading listed GSM operators—Bharti Airtel and Idea Cellular— falling by 8.3 per cent and 8.2 per cent respectively on the Bombay Stock Exchange.

TRAI had on Tuesday suggested that a one-time fee be levied on existing telecom companies that are using 2G spectrum in excess of the quantum they were licensed to use.

Even as the markets reacted, experts were not sure if the recommendatiosn would be adopted in its existing form.

“If this gets implemented Bharti Airtel and Idea Cellular will incur an outflow of Rs 3,500 crore and Rs 1,100 crore respectively,” said a telecom analyst at Indiabulls Securities.

The TRAI recommendation comes at a time when companies in the telecom sector are facing pressure on the margin front. It will only add to pressure and weaken profitability outlook, said one analyst.

“We have been cautious on the sector because of pricing pressures and there is another negativity in terms of number portability that may impact the existing players going forward,” said Gaurav Dua, head of research at Sharekhan Securities.