Spice Communications (up 14.15%), Reliance Communication (up 2.80%), Bharti Airtel (up 2%), Idea Cellular (up 1.67%), and MTNL (up 0.43%), rose.
The licence fee cut will benefit the four top operators the most, since their networks cover all census towns and large villages in several states.
Besides slashing the annual licence fee, the Department of Telecom (DoT) is also reportedly seeking an approval from the finance ministry to exempt all licence fee for landline services.
The DoT is also reportedly planning to speed up the introduction of a single-levy structure, after sector regulator Telecom Regulatory Authority of India (Trai) gives its recommendations on this subject next month. At present, telecom operators pay up to 30% of their revenues towards different levies to the government.
Along with these measures, the communications ministry is reported to be working with the finance ministry to release up to Rs 16,000 crore from the Universal Service Obligation Fund in the next 24 months to subsidise both private and state-owned operators' expansion to rural areas.
As per reports, all telecom operators have been paying 5% of their annual revenues towards this fund since 2002, taking the kitty to Rs 20,000 crore, which has been lying idle. Every consumer, who makes a phone call (mobile and landline), contributes towards the fund.
Earlier this year, the government had shelved its decision to slash the licence fee for telecom operators with large network presence by up to a third from 1 April 2009, following opposition from the finance ministry.
After this, the communications ministry had informed all telcos that the 'licence fee cut has been kept in abeyance'.
Telecom minister A Raja will now seek fresh clearance from the finance ministry on the issue, as this proposal will help the industry save up to Rs 2,000 crore annually.
At present, telcos pay 10% of their revenues as licence fee in category 'A' circles (Tamil Nadu and Maharashtra, among others) 8% in 'B' zones (Kerala, Punjab and Haryana, among others) and 6% for 'C' circles (Himachal Pradesh, Bihar and Orissa, among others).
As per last year's announcement, these would have come down to 8%, 6% and 4% for operators with networks covering over 95% of the residential areas in a circle.
Telecom stocks have been in the doldrums for the past few days on concerns that raging tariff war will further shrink revenues and margins of telecom companies.
Bharti Airtel had underperformed the market over the past one month till 4 November 2009, falling 29.80% as compared to the Sensex 7.13% fall. It underperformed the market in past one quarter, sliding 23.70% as against 0.51% rise in the Sensex.
Reliance Communication had underperformed the market over the past one month till 4 November 2009, tumbling 46.75% as compared to the Sensex 7.13% fall. It underperformed the market in past one quarter, falling 40.05% as against 0.51% rise in the Sensex.
Idea Cellular had underperformed the market over the past one month till 4 November 2009, falling 30.83% as compared to the Sensex 7.13% fall. It underperformed the market in past one quarter, correction 34.97% as against 0.51% rise in the Sensex.
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