Shares in mobile network operators rallied on Tuesday with Bharti Airtel Ltd(BRTI.NS) rising as much as 9.3 percent to the highest level since February 1, on hopes the government will be forced to cut the reserve price for airwaves after just one potential bidder emerged for a $7.9 billion spectrum sale next month. Shares later pared gains.
The Indian mobile unit of Russian conglomerate Sistema(SSAq.L) was the only bidder for the CDMA band airwaves and there was no applicant for the dominant GSM bands that account for close to 85 percent of the spectrum being put on the block.
Leading carriers Bharti Airtel and the Indian unit of Vodafone Group Plc (VOD.L), which are required to bid for airwaves in the premium 900 megahertz band to renew their permits in some key zones, stayed away from bidding after challenging the auction in a court.
"Earlier the expectation was these operators will be compelled to bid," said a Mumbai-based telecommunications analyst at a foreign bank. "Now that they did not bid, it is almost certain that the prices will have to come down," said the analyst, who did not want to be named as he is not authorised to speak to the media.
Carriers mostly shunned another auction in November, saying the minimum bid price for the airwaves was too high, forcing the government to cut prices by about 30 percent in some key zones. That cut was not sufficient, the industry says.
Bharti Airtel would have had to pay about $1.4 billion at the current reserve price to buy back the premium band airwaves in the Delhi and Kolkata service areas, according to an estimate by BNP Paribas.
Bharti Airtel shares ended up 1.56 percent, while shares in Idea Cellular Ltd (IDEA.NS), India's third-biggest mobile carrier by revenue, ended with gains of 4.14 percent.
Idea is not required to bid in the March auction, but any possible cut in reserve price will also help it when it buys airwaves in subsequent auctions.
"There are chances that the government will reduce prices significantly," said Archana Shivane, a sector analyst at K.R. Choksey Shares and Securities Pvt Ltd in Mumbai. "That will consequently make Bharti, Vodafone, Idea pay lower spectrum prices to government. So ultimately that will come on (their) balance sheet in terms of lower debt," she said.
(Reporting by Devidutta Tripathy in New Delhi and Rafael Nam and Aradhana Aravindan in Mumbai; Editing by Matt Driskill)
New RBI chief's policies to broadly echo Rajan's: Reuters poll
BENGALURU Indian monetary policy is likely to stay broadly unchanged when Urjit Patel takes over as Reserve Bank of India governor, according to a Reuters poll, but his approach to cleaning up public banks' bad debts could be less stringent.
Interview: Oil market rebalancing could take until end 2017 - Shell
STAVANGER, Norway The huge global oil oversupply that has weighed on prices for the past two years may not clear until the second half of 2017, Shell's chief energy adviser Wim Thomas told Reuters.
Wall St gains as financials rally on Fed rate comments
Wall Street snapped a three-day losing streak on Monday as financial stocks rose after Federal Reserve Chair Janet Yellen said the case for an interest rate hike had strengthened.