3G to have positive impact on telecom stocks: Analysts
The 3G technology will open up new business opportunities for the winning bidders and will have a positive impact especially on the stocks of the listed telecom entities in the long-term, according to analysts.india Updated: May 20, 2010 01:11 IST
The 3G technology will open up new business opportunities for the winning bidders and will have a positive impact especially on the stocks of the listed telecom entities in the long-term, according to analysts.
Experts feel that the huge cost related to rolling out the new technology will not have much of an impact on share prices of telecom companies since it has already being factored by investors.
"The 3G technology will create new business for the companies which have placed their bids in the auction. Though they have to shell-out huge cash for the developing infrastructure for the technology, its impact has already being factored in by the market and will now have positive effect on the telecom stocks," CNI Research CMD Kishor P Ostwal said.
The auction for 3G licences closed today, leaving finance minister Pranab Mukherjee with Rs 67,710 crore (around $15 billion) -- almost twice the revenue he expected to raise. A pan-India bid for third generation spectrum stood at Rs 16,750.58 crore and the Anil Ambani-led RCom bagged the highest number of 13 circles, followed by Bharti in 12, Idea in 11 and Vodafone and the Tatas in nine circles each, according to the department of telecom.
Further, Unicon Financial chief executive Gajendra Nagpal said all the companies who have participated in the auction have place their bid aggressively, but have placed their bids smartly in circles where they are already present.
The government had estimated raising Rs 35,000 crore from sale of spectrum for 3G as well as broadband wireless access (BWA) put together.
"In short-term perspective, there may be some pressure on the balance sheets of telecom operators, but for long-term it is good for them as 3G services will be in demand of future," Geojit BNP Paribas Financial Services research head Alex Mathews said.
Further, Nagpal said it will definitely have an impact on the balance sheet of the companies but this is a capital investment and the companies will reap gains after at least an year or two years. But with auction for BWA spectrum yet to begin, the revenue mop up could go up further.