Telecommunications - Muted participation, outcome +ve for incumbents - Emkay

- As anticipated 2G auctions (1800MHz) concluded with muted participation from telcos, due to high reserve price. Govt. received bids for 127MHZ spectrum out of 247MHz offered for sale. Govt. would get inflow of Rs94bn with upfront payment of Rs31bn (33% upfront)

- Delhi, Mumbai, Karnataka & Rajasthan that accounted for 51% of reserve price did not receive any bid. However, other 18 circles discovered market determined spectrum price

- We believe that lack of participation in 4 key circles would lead to lower reserve price going forward, which would be +ve for the industry and reduce spectrum related payouts

- Hence, we lower -ve impact of regulatory payouts from TP of Bharti & Idea. Upgrade Bharti to HOLD while maintain reduce on Idea. Revised TP stands at Rs280/Rs87 for Bharti/Idea.

Source : Equity Bulls

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