Idea, Bharti Airtel Fall as Spectrum Auction Gets Off to Strong Start

Shares of Idea Cellular and Bharti Airtel fell on Thursday amid the ongoing spectrum auction. The auction could take days or even weeks depending on bidding intensity. The government will not disclose company-specific bids until the auction is over.

On Wednesday, the government received bids worth about Rs 61,700 crore after six rounds of bidding. The reserve price for the auction is Rs 82,000 crore, but government sources have indicated that the bidding could top Rs 1 lakh crore.

Idea fell as much as 3.5 per cent at its day's low of Rs 150.40. Bharti Airtel declined nearly 2 per cent at its day's low of Rs 344.

For Idea and Bharti Airtel, this spectrum auction is crucial because Idea's licences in nine circles and Airtel's licences in six circles are expiring this year.

According to ratings agency Fitch, "Idea is most exposed in the auctions as it needs to retain its expiring spectrum in circles which contribute around 70 per cent of its annual revenue."

For Airtel, the expiring spectrum makes up for nearly 35 per cent of its revenues, Fitch says.

Sunil Mittal, the chief of Bharti Enterprises which owns Airtel, said that the spectrum auction is likely to weigh on the financials of telecom companies.

At 10:31 am, Idea's shares were down 2.5 per cent while Bharti Airtel slipped 0.80 per cent.