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Telecom stocks are expected to trade in a narrow band next week as domestic stock market will remain closed on Tuesday and Wednesday for Laxmi Pujan and Diwali Balipratipada, respectively.
From Monday, the auction for the 1,800 MHz (global system for mobile) spectrum would commence that would see participation from five telecom companies, including Bharti Airtel Ltd, Vodafone South Ltd and Idea Cellular Ltd. The government has set a base price of 35 bln rupees for per block of 1.25 MHz spectrum in the 1,800 MHz and will be auctioning minimum 10 MHz per circle area. Telecom stocks, have been avoided by investors for some time now, on account of regulatory and policy uncertainty. However,we expect the long overhanging uncertainty surrounding the sector to get over now as the government recently gave their decisions on the major policy issues.
Cabinet on Thursday approved the one-time spectrum charge on telecom companies, which is expected to lead to an outgo of 310 bln rupees. Earlier ministerial panel on spectrum headed by Finance Minister P. Chidambaram had allowed incumbent operators such as Bharti Airtel to retain 2.5 MHz of spectrum in the 900 MHz once their licences come for renewal beginning 2014.
