Indus Towers, Vodafone Idea & Airtel shares climb up to 3% from day's lows; here's why

Shares of Indus Towers Ltd, Vodafone Idea Ltd (VIL) and Bharti Airtel Ltd turned positive in Monday's late trading session. Indus Tower rose 3.09 per cent from its intraday low price of Rs 331.40 to hit a high of Rs 341.65. Likewise, VIL and Airtel moved 2.97 per cent and 1.84 per cent higher from their intraday-low prices to trade at Rs 17.34 and Rs 1,423.10, respectively.

These telecom counters gained some momentum after it was reported that Airtel is in talks with Vodafone Group PLC to purchase a 3 per cent stake in Indus Towers. With that being said, BT could not independently verify the CNBC-TV18 report at the time of writing this story.

This buzz came just a day before the telecom spectrum auction, scheduled to be held on Tuesday (June 25). The Centre will put airwaves worth Rs 96,317.65 crore on sale as it begins this year's spectrum auction. Antique Stock Broking said the bidding process is unlikely to be a spirited exercise.

The brokerage suggested that Bharti Airtel may bid for some of its expiring spectrum worth Rs 3,820 crore while Jio will be selective and will base its bidding on data traffic flow in individual circles.

In the case of VIL, Antique said the telco would be limited by its EMD (Earnest money deposit) deposit and may only bid for the expiring spectrum or the 26 GHz band to lower Spectrum Usage Charges (SUC) cost.

"Overall, we do not expect any player to bid aggressively at the auction. We maintain a 'Buy' rating on Bharti Airtel with a target price of Rs 1,590 as it is poised to benefit from the tariff hikes in the near future (and in FY27) and higher FCF due to declining capex intensity," the brokerage stated.

A total of 10,523.15 MHz of spectrum worth Rs 96,300 crore as the base prize is up for sale. Like the previous auction round in 2022, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz, 3300 MHz and 26 GHz bands are up for sale, but 600 MHz and 700 MHz bands have been excluded.

EMD of Rs 4,350 crore has been deposited by three telecom players, which could mean a total bid amount of Rs 52,200 crore based on a maximum limit of 12 times the EMD amount.

The successful bidders will have to make payments within 10 days or will be allowed to make payments in 20 equal annual instalments at an interest rate of 8.65 per cent. Similar to the previous auction, there will be no SUC for the spectrum acquired in this auction.