Idea Cellular shares surged as much as 6 per cent, while Bharti Airtel jumped over 4 per cent on Friday after the uncertainty around the 2G spectrum auction ended on Thursday. Bharti Airtel managed to retain most of its efficient 900MHz spectrum in Delhi, Mumbai and Kolkata. Idea won 900 MHz spectrum in Delhi.
As of 09.30 a.m., Idea Cellular traded 5.7 per cent higher at Rs 138.90, while Bharti Airtel was up 4.1 per cent at Rs 315. Reliance Communications, which was a marginal player in the auction, traded 3.15 per cent higher at Rs 122.70.
"Telecom stocks had gone down over the course of the auction, but now there is more clarity on outflows. Most operators have fulfilled their implementation plan for the auction to get spectrum where they wanted to hence the market is reacting positively," Jaideep Ghosh, partner at KPMG told NDTV.
Rohit Chordia of Kotak Institutional Equities told NDTV that the payouts in the auction have been higher than expected and operators have bought more spectrum than needed, but the auction is a medium term positive for the sector as a whole.
"The ability to sustain in this market will remain with companies that have strong balance sheet and that sets the industry on a path of consolidation," he added.
Kotak has a positive view on both Bharti Airtel and Idea Cellular.
Analysts also bet that mobile operators will raise call rates to compensate for higher spectrum charges. Bharti Airtel, Vodafone and Idea last year raised voice prices for the first time in three years. Mobile companies have also been cutting discounts previously offered to lure customers in a highly-competitive market.
Bank of America Merrill Lynch said auction outcome does involve financial stress and tariff increases are the only upside catalyst for mobile companies.
According to early estimates, Bharti Airtel's debt will go up by 33 per cent in 2014-15, while Idea Cellular's debt will go up by a massive 179 per cent because of spectrum payout.
Call rates in India are among the cheapest in the world, but prices have gone up since a Supreme Court order revoked permits of some smaller carriers reducing competition. There are still about a dozen players, but the top three telecom operators now account for more than 70 per cent of mobile industry revenue.
Analysts bearish on telecom stocks:
Technical analyst Rajat Bose said investors should sell both Idea Cellular and Bharti Airtel. Ambaressh Baliga of Edelweiss Global Wealth said high spectrum prices are a negative for the telecom sector.
"Mobile operators cannot increase tariffs as average revenue per user (ARPU) will come down. Further, Reliance Jio's entry may change the game and put pressure on telecom players," Mr Baliga added.
Credit Suisse says industry returns will drop even before the launch of Reliance Jio. Additional auction payouts will lead to 15-30 per cent cuts in earnings, it added.
Macquarie cut its target on Bharti Airtel to Rs 390 and on Idea to Rs 177.
2G auction facts:
For the 900 MHz in the three metros, telcos paid a premium of 84 per cent over the reserve price, while for the 1800 MHz, mobile operators paid 29 per cent more than the reserve price. Bharti Airtel spent close to Rs 18,500 crore, while Idea Cellular paid Rs 10,700 crore in the auction.
Delhi circle saw a price jump of 106 per cent, while prices in Mumbai were 72 per cent higher than reserve price. Kolkata saw a 56 per cent price rise over base price.
Idea Cellular shares surged as much as 6 per cent, while Bharti Airtel jumped over 4 per cent on Friday after the uncertainty around the 2G spectrum auction ended on Thursday. Bharti Airtel managed to retain most of its efficient 900MHz spectrum in Delhi, Mumbai and Kolkata. Idea won 900 MHz spectrum in Delhi.
As of 09.30 a.m., Idea Cellular traded 5.7 per cent higher at Rs 138.90, while Bharti Airtel was up 4.1 per cent at Rs 315. Reliance Communications, which was a marginal player in the auction, traded 3.15 per cent higher at Rs 122.70.
"Telecom stocks had gone down over the course of the auction, but now there is more clarity on outflows. Most operators have fulfilled their implementation plan for the auction to get spectrum where they wanted to hence the market is reacting positively," Jaideep Ghosh, partner at KPMG told NDTV.
Rohit Chordia of Kotak Institutional Equities told NDTV that the payouts in the auction have been higher than expected and operators have bought more spectrum than needed, but the auction is a medium term positive for the sector as a whole.
"The ability to sustain in this market will remain with companies that have strong balance sheet and that sets the industry on a path of consolidation," he added.
Kotak has a positive view on both Bharti Airtel and Idea Cellular.
Analysts also bet that mobile operators will raise call rates to compensate for higher spectrum charges. Bharti Airtel, Vodafone and Idea last year raised voice prices for the first time in three years. Mobile companies have also been cutting discounts previously offered to lure customers in a highly-competitive market.
Bank of America Merrill Lynch said auction outcome does involve financial stress and tariff increases are the only upside catalyst for mobile companies.
According to early estimates, Bharti Airtel's debt will go up by 33 per cent in 2014-15, while Idea Cellular's debt will go up by a massive 179 per cent because of spectrum payout.
Call rates in India are among the cheapest in the world, but prices have gone up since a Supreme Court order revoked permits of some smaller carriers reducing competition. There are still about a dozen players, but the top three telecom operators now account for more than 70 per cent of mobile industry revenue.
Analysts bearish on telecom stocks:
Technical analyst Rajat Bose said investors should sell both Idea Cellular and Bharti Airtel. Ambaressh Baliga of Edelweiss Global Wealth said high spectrum prices are a negative for the telecom sector.
"Mobile operators cannot increase tariffs as average revenue per user (ARPU) will come down. Further, Reliance Jio's entry may change the game and put pressure on telecom players," Mr Baliga added.
Credit Suisse says industry returns will drop even before the launch of Reliance Jio. Additional auction payouts will lead to 15-30 per cent cuts in earnings, it added.
Macquarie cut its target on Bharti Airtel to Rs 390 and on Idea to Rs 177.
2G auction facts:
For the 900 MHz in the three metros, telcos paid a premium of 84 per cent over the reserve price, while for the 1800 MHz, mobile operators paid 29 per cent more than the reserve price. Bharti Airtel spent close to Rs 18,500 crore, while Idea Cellular paid Rs 10,700 crore in the auction.
Delhi circle saw a price jump of 106 per cent, while prices in Mumbai were 72 per cent higher than reserve price. Kolkata saw a 56 per cent price rise over base price.
Idea Cellular shares surged as much as 6 per cent, while Bharti Airtel jumped over 4 per cent on Friday after the uncertainty around the 2G spectrum auction ended on Thursday. Bharti Airtel managed to retain most of its efficient 900MHz spectrum in Delhi, Mumbai and Kolkata. Idea won 900 MHz spectrum in Delhi.
As of 09.30 a.m., Idea Cellular traded 5.7 per cent higher at Rs 138.90, while Bharti Airtel was up 4.1 per cent at Rs 315. Reliance Communications, which was a marginal player in the auction, traded 3.15 per cent higher at Rs 122.70.
"Telecom stocks had gone down over the course of the auction, but now there is more clarity on outflows. Most operators have fulfilled their implementation plan for the auction to get spectrum where they wanted to hence the market is reacting positively," Jaideep Ghosh, partner at KPMG told NDTV.
Rohit Chordia of Kotak Institutional Equities told NDTV that the payouts in the auction have been higher than expected and operators have bought more spectrum than needed, but the auction is a medium term positive for the sector as a whole.
"The ability to sustain in this market will remain with companies that have strong balance sheet and that sets the industry on a path of consolidation," he added.
Kotak has a positive view on both Bharti Airtel and Idea Cellular.
Analysts also bet that mobile operators will raise call rates to compensate for higher spectrum charges. Bharti Airtel, Vodafone and Idea last year raised voice prices for the first time in three years. Mobile companies have also been cutting discounts previously offered to lure customers in a highly-competitive market.
Bank of America Merrill Lynch said auction outcome does involve financial stress and tariff increases are the only upside catalyst for mobile companies.
According to early estimates, Bharti Airtel's debt will go up by 33 per cent in 2014-15, while Idea Cellular's debt will go up by a massive 179 per cent because of spectrum payout.
Call rates in India are among the cheapest in the world, but prices have gone up since a Supreme Court order revoked permits of some smaller carriers reducing competition. There are still about a dozen players, but the top three telecom operators now account for more than 70 per cent of mobile industry revenue.
Analysts bearish on telecom stocks:
Technical analyst Rajat Bose said investors should sell both Idea Cellular and Bharti Airtel. Ambaressh Baliga of Edelweiss Global Wealth said high spectrum prices are a negative for the telecom sector.
"Mobile operators cannot increase tariffs as average revenue per user (ARPU) will come down. Further, Reliance Jio's entry may change the game and put pressure on telecom players," Mr Baliga added.
Credit Suisse says industry returns will drop even before the launch of Reliance Jio. Additional auction payouts will lead to 15-30 per cent cuts in earnings, it added.
Macquarie cut its target on Bharti Airtel to Rs 390 and on Idea to Rs 177.
2G auction facts:
For the 900 MHz in the three metros, telcos paid a premium of 84 per cent over the reserve price, while for the 1800 MHz, mobile operators paid 29 per cent more than the reserve price. Bharti Airtel spent close to Rs 18,500 crore, while Idea Cellular paid Rs 10,700 crore in the auction.
Delhi circle saw a price jump of 106 per cent, while prices in Mumbai were 72 per cent higher than reserve price. Kolkata saw a 56 per cent price rise over base price.
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