Key indices Sensex and Nifty ended trading on Thursday with minor losses even as shares of telecom service providers Idea Cellular and Bharti Airtel dropped sharply over telecom regulator Trai recommending auctioning of 700 Mhz spectrum at a pan-India reserve price of Rs 11,485 crore per Mhz, the highest for a telecom frequency band.
Bharti Airtel fell 2.32% to close at Rs 291 on the BSE after hitting a 52-week low of Rs 289 intraday. Idea Cellular ended the day with a loss of 4.08% at Rs 104.75.
The S&P BSE Sensex was down 22 points, or 0.09%, and closed at 24,469, while the NSE Nifty ended at 7,424, a loss of 0.18%, on the day of January futures & options (F&O) expiry.
Analysts have said that the Central government's move to auction 700 Mhz spectrum at such a high price may not find enough takers, given that it is not necessary for telecom service providers (telcos) to buy it. Additionally, several telecom providers have huge debt on their books and may not be inclined to bid aggressively this time.
Telcos had bid aggressively for a whopping Rs 109,874 crore ($17.7 billion) last March when the government auctioned spectrum across 1800 MHz, 900 MHz, 2100 MHz and 800 MHz bands.
"However, this time 700 (Mhz band spectrum) will be a nice to have a spectrum, but it is not a must have, because most of the telecom companies already have spectrum to roll out the 4G services and the existing 3G services. So, in our view, there will be limited participation for the 700 megahertz spectrum if it comes in this calendar year," Nitin Soni, director, Asia-Pacific corporate ratings at Fitch Ratings, told CNBC-TV18.
Moreover, telcos such as Bharti and Idea have opposed the auction of &00 Mhz band spectrum till devices and equipment that can operate using the airwaves are available, reported Mint.
In another significant development, the government announced the first list of 20 smart cities, which includes Chennai, the New Delhi area, Surat, Jaipur, Kochi, Jabalpur, Solapur, Udaipur, Bhopal, Guwahati, Indore, Davanagere, Bhuvaneshwar, Pune, Coimbatore, Kakinada, Belgaum, Ahmedabad, Vishakapatnam and Ludhiana.
On the earnings front, Maruti Suzuki and ICICI Bank, two Sensex heavyweights, will be declaring their third quarter results on Thursday.