Telecom Stocks Outlook for the week (21-24.08.2012)

[rupeedesk]

Telecom Stocks Outlook for the week (21-24.08.2012)

High cost of spectrum and unfavourable regulatory environment is seen limiting any significant upside in telecom stocks next week and in the medium-term.  The Union Cabinet-approved base price for the upcoming auction of 2G spectrum is expected to further strain telecom companies' balance sheets, which is already highly leveraged.

The Cabinet has set 28 bln rupees as the base price for auction of 1,800 MHz GSM bandwidth, while the base price for 800 MHz CDMA has been set at 1.3

times to that of 1,800 MHz band.

The auction may receive a subdued response as most players are highly leveraged and are finding it difficult to service their existing debt. The Supreme Court, which has mandated that the 2G auctions be completed by Aug 31, has been approached by the government to extend to deadline to Nov 12 on the ground that adequate time needs to be given to conduct the auction in a fair and transparent manner.

The government has selected Times Internet Ltd as the auctioneer to conduct the spectrum sale.

By RUPEE DESK

rupe...@googlegroups.com