Telecom stocks higher; benefit from poor response to 2G auction

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 Tele stocks soar; benefit from poor response to 2g auction
Bharti Airtel: Quotes, News
BSE 311.05BSE Quote4.55 (1.46%)
NSE 311.80NSE Quote5.15 (1.65%)
Idea Cellular: Quotes, News
BSE 75.40BSE Quote1.6 (2.12%)
NSE 75.30NSE Quote1.5 (1.99%)
The dismal response to the 2G auction and ensuing benefits to existing players, saw telecom stocks surge in trade today.

Idea Cellular was up 2%, while Bharti Airtel surged more than 3% in trade today.

A Reuters said that BoA-Merrill had upgraded Bharti Airtel and Idea Cellular to 'buy' from 'neutral' citing the positive outcome of the 2G auction this week.

"The "deep" under-performance in both stocks over the past 12 months, potential for more favourable policy decisions in areas such as spectrum pricing, and prospect of "strong" fiscal 2014-15 earnings growth would drive Bharti and Idea, the Reuters report said.

The government conducted the 2G auction recently in which it received a very tepid response, which would ensure lower pricing and lesser competition for existing players.

Over the last few years, players in the industry have been saddled with massive debts and cut throat competition that has affected performance.

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