Shares of Bharti Airtel and Idea Cellular on Tuesday surged as much as nine per cent on the bourses amid reports that the government is likely to cut the reserve price for airwaves after just one company Sistema Shyam bid for the spectrum sale next month.
"No application was received for the second round of 2G GSM spectrum till the official declared time of 5:00 pm, while SSTL was the lone applicant in the CDMA spectrum auction," a DoT source said on Monday.
On the back of this, leading GSM incumbent Bharti Airtel's shares opened on a bullish note and then gained further ground and touched an early high of Rs 334.55 on the BSE, higher by 8.96 per cent from its previous closing price.
Similar movement was witnessed on the Idea Cellular counter as well, where the stock after opening at Rs 114.45, surged over 4.43 per cent from its previous closing price and touched an early high of Rs 118.85 on the BSE.
Commenting on the uptrend in the stocks, marketmen said the government's 2G spectrum auction next month looks set to flop with just one company, Russia's Sistema, making application for participation in sale of airwaves and this might force the government to cut the reserve price in the auctions of remaining airwaves.
Russia's Sistema had yesterday submitted application for participation in sale of airwaves, that too in just one of the three bands for which bids were invited.
The Department of Telecommunications had announced conducting auction for spectrum unsold in November along with spectrum that is being held by operators whose licences are due for renewal in 2014.