India Bharti shares fall 6 percent on competition fears

By siliconindia   |   Friday, 14 December 2007, 20:30 IST
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Mumbai: Bharti Airtel, one of the major mobile operators in India, witnessed a 6 percent fall in its shares on Thursday, a day after a tribunal ruled in favor of new players for spectrum that would increase competition. India's wireless market is the world’s fastest growing that has been signing up about 8 million subscribers a month, but the expansion has caused a shortage of spectrum or airwaves needed to connect mobile calls. On Wednesday, India's telecoms tribunal asked the government to issue spectrum to new players ‘right away’, and to defer the allotment of additional spectrum to existing players until a government committee recommends fresh rules. Bharti, with nearly 53 million mobile subscribers by the end of November and a more than 23 percent share of the market, will be the biggest loser, analysts said. "Spectrum crunch is going to affect its quality of services. That is why the market is hammering the stock," said Harit Shah, a telecoms analyst with Angel Broking, a local brokerage. At 0955 GMT, Bharti was down 6.3 percent at 987 rupees. It has lost more than 14 percent from a record high of 1,149 rupees on October 10. The tribunal’s ruling will clear the way for the other major player, Reliance Communications, which mainly operates on the CDMA platform but is expanding to the popular GSM services. India had issued separate licenses and spectrum for CDMA and GSM services, but decided in October to allow Reliance to use the same license for offering GSM in new telecom circles or zones. An industry body, in which Bharti is an active participant, had challenged the decision in the tribunal, which stayed allocation of spectrum in November. With the ruling on Wednesday, the tribunal has revoked the stay. There are 217 million wireless subscribers in India, and the potential for growth is huge as less than a fifth of country's population has access to a mobile phone. The government has received more than 500 applications from 46 firms, including AT&T, seeking licenses for some or all of the 23 telecom zones in India. A top government official said last week that it would approve licenses to some applicants. Idea Cellular, an upcoming telecom company, which is waiting for spectrum allocation to start services in zones such as Mumbai, would also benefit from the tribunal order, Shah said.

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