Telecom stocks tumble down

Telecom stocks have literally fallen off the cliff today. Idea Cellular is the top loser in the pack, down 5.2% at Rs.159.50, Bharti Airtel is down 4.5% at Rs.316.75 and Rcom is also in the down, at Rs.123.15, down 3%.

These stocks have tumbled down sharply after Mukesh Ambani owned Reliance Industries, through its telecom, Reliance Jio Infocomm announced that it is also entering the telecom bidding process. It had made an application to bid for spectrum in the 900-MHz and 1,800-MHz bands across the country.

This has shaken up the entire market, as the entry of Reliance is expected to hike up the bidding price even higher. These telecom companies will now witness some aggressive bidding to retain spectrum in the 900-MHz band.

Following this, most brokerage houses have downgraded telecom stocks. Credit Suisse, in its note has stated that existing players could either lose customers or might have to take pre-emptive price cuts to retain top end customers who generate bulk of volumes and profitability.