Tariff reduction spells gain for telecom shares
Telecom pivotals of the Sensex and Nifty were up between 0.7 - 2%, after the latest order of the telecom regulator slashing tariffs for users.
VSNL rose 2% to Rs 386.50, Reliance Communications gained 1.3% to Rs 405.50, Bharti Airtel gained 1.1% to Rs 747 and MTNL gained 0.7% to Rs 146.25, boosted by news of the Telecom Regulatory Authority of India (TRAI) cutting access deficit charges.
Reliance Communications (RCL) had bounced back in the past two days after the company announced on Monday (19 March) that it had got the court's nod for demerger of its two business in favour of a separate company. It had risen to Rs 400.30 from Rs 376.90 on 16 March 2007. Earlier, the RCL stock had tumbled on concerns of increased competition from Vodafone after the British mobile services provider, on 15 March, reached a partnership agreement with Essar. From Rs 398.55 on 14 March 2007, RCL retreated to Rs 376.90 by 16 March 2007.
VSNL had recovered from the lower level after a setback in early February - early March 2007. From Rs 355.25 on 5 March 2007, VSNL's scrip had firmed up to Rs 377.70 by 20 March 2007.
The total amount of access deficit charge (ADC), the fee paid by all telecoms users to fund loss-making rural network expansion by state-run Bharat Sanchar Nigam (BSNL), has been reduced to approximately Rs 2000 crore from the existing level of Rs 3200 crore for the financial year 2007/08, TRAI informed.
Apart from the cut in the annual charge firms pay, the regulator also abolished the ADC on all outgoing international calls from a previous 80 paise per minute. The charge on incoming calls from overseas was cut by 38%. The new fee structure will be applicable from 1 April 2007.
Market men are also awaiting announcement regarding annual licence fees and spectrum charges for wireless telephony. In the Union Budget 2007-08, the finance minister proposed setting up a committee to consider reduction in annual licence fees and spectrum charges for wireless telephony, in order to align them with international rates. At the moment, wireless companies pay 6-10% of net revenues as license fee and 2-6% as spectrum charges based on the circle and the spectrum used.
The Department of Telecom (DoT) favours a 6% annual license fee compared to the existing 6 - 10%, and is likely to recommend a cut. But the final call on this will be taken by the finance ministry.
VSNL rose 2% to Rs 386.50, Reliance Communications gained 1.3% to Rs 405.50, Bharti Airtel gained 1.1% to Rs 747 and MTNL gained 0.7% to Rs 146.25, boosted by news of the Telecom Regulatory Authority of India (TRAI) cutting access deficit charges.
Reliance Communications (RCL) had bounced back in the past two days after the company announced on Monday (19 March) that it had got the court's nod for demerger of its two business in favour of a separate company. It had risen to Rs 400.30 from Rs 376.90 on 16 March 2007. Earlier, the RCL stock had tumbled on concerns of increased competition from Vodafone after the British mobile services provider, on 15 March, reached a partnership agreement with Essar. From Rs 398.55 on 14 March 2007, RCL retreated to Rs 376.90 by 16 March 2007.
VSNL had recovered from the lower level after a setback in early February - early March 2007. From Rs 355.25 on 5 March 2007, VSNL's scrip had firmed up to Rs 377.70 by 20 March 2007.
The total amount of access deficit charge (ADC), the fee paid by all telecoms users to fund loss-making rural network expansion by state-run Bharat Sanchar Nigam (BSNL), has been reduced to approximately Rs 2000 crore from the existing level of Rs 3200 crore for the financial year 2007/08, TRAI informed.
Apart from the cut in the annual charge firms pay, the regulator also abolished the ADC on all outgoing international calls from a previous 80 paise per minute. The charge on incoming calls from overseas was cut by 38%. The new fee structure will be applicable from 1 April 2007.
Market men are also awaiting announcement regarding annual licence fees and spectrum charges for wireless telephony. In the Union Budget 2007-08, the finance minister proposed setting up a committee to consider reduction in annual licence fees and spectrum charges for wireless telephony, in order to align them with international rates. At the moment, wireless companies pay 6-10% of net revenues as license fee and 2-6% as spectrum charges based on the circle and the spectrum used.
The Department of Telecom (DoT) favours a 6% annual license fee compared to the existing 6 - 10%, and is likely to recommend a cut. But the final call on this will be taken by the finance ministry.
Labels: Bharti Airtel, Reliance Comm, tariff reduction, TRAI, VSNL
posted by SY at 2:47 PM
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