Telecom shares gain on DoT move on infrastructure sharing

MUMBAI: Shares of telecom companies surged on Wednesday cheering the Department of Telecommunications' move permitting sharing of active infrastructure among service providers.

"The move is expected to benefit new entrants in the telecom sector the most, as they can expand their network without having to invest in active or passive infrastructure," said Brijesh Rajvanshi, research analyst with Networth Stock Broking.

Earlier, only passive sharing of infrastructure was allowed by the DoT. Passive infrastructure-sharing refers to sharing of physical sites, buildings, shelters, towers, masts, power supply and battery back-up. Active infrastructure sharing is about accessing a common antenna, feeder cable, radio access network, node and transmission system.

Around ten companies including Videocon-controlled Datacom Solutions, Birla's Idea Cellular, Swan Telecom, Unitech, ByCell Telecommunications, Spice Communications and Shyam Telelink will make their foray across various telecom circles.

DoT's move will significantly bring down the cost of rolling out telecom network infrastructure, resulting in lowering of tariffs and increase in telecom penetration, Rajvanshi added.

Issuing the guidelines on infrastructure sharing, the Department of Telecom said, "sharing of active infrastructure among service providers based on the mutual agreements entered among them is permitted."

But Rajvanshi is sceptical whether the existing telecom companies will be willing to share their active services with the new entrants, given the increasing competition in the market.

Shares of the new entrants like Spice Communications surged 10.24 per cent, Shyam Telecom rose 1.93 per cent, Videocon added 2.25 per cent and Idea Cellular gained 0.93 per cent.

Among the existing players, Bharti Airtel shares rose 2.41 per cent while Reliance Communications ended down 0.35 per cent.

According to media reports, the Indian telecom sector is likely to see an investment of over Rs 1,30,000 crore in the next two years, which calls for a positive outlook for the sector.

Networth's Rajvanshi is bullish on Reliance Communications and Bharti Airtel, given their pan-India presence.