Bharti and Idea rally upwards

In the morning trades, Bharti Airtel rose over 2.5% to Rs.414 and Idea Cellular rose almost 4.5% to Rs.83.10; since then both have come down and just about teetering in the green zone.

The market is relieved to see some package coming to the rescue of telecom sector. Yesterday, the Govt allowed telecom firms more time to pay for spectrum in auctions and relaxed the spectrum holding limit.

The Govt has now allowed telecom companies to pay for spectrum over 16 years instead of 10 years. This increase in time limit is expected to boost the cash flow of the companies.

The Cabinet also approved increasing overall spectrum cap per operator from 25% to 35%. It also scrapped a rule that restricted operators from holding more than 50% spectrum in a single band in a circle. The new norms have set a cap of 50% on the combined spectrum holding in the sub-l GHz bands in a circle.

This bodes well for Reliance Jio as it will now allow Mukesh to buy all of RCom’s spectrum in the 800MHz band. It will also help Vodafone and Idea merger as increase in spectrum cap means they will not have to surrender spectrum in seven circles.