The Empowered Group of Ministers (EGoM) on Monday approved spectrum usage charge (SUC) of 5 per cent for airwaves to be auctioned next month, in a move that dragged telecom stocks down.

The EGoM yesterday decided that all existing telecom services providers would have to shell out the weighted average of their existing SUC, and 5 per cent if they buy new spectrum. However, the SUC for broadband wireless access (BWA) spectrum kept unchanged at 1 per cent.

The SUC approved by the EGoM yesterday is higher than the 3 per cent recommended by the Telecom Regulatory Authority of India (Trai). It may be noted here that SUC is levied once a year by the government as a percentage of revenue earned by telecom operators.

Following the announcement of higher SUC, telecom stocks slipped. Idea Cellular shares slipped 4.72 per cent to close at Rs 145.30 apiece on Monday, while shares of Bharti Airtel shed 1.99% to close at Rs 307.05 apiece.

Shares of Reliance Communications Ltd slipped 5.07 per cent to close at Rs 122.60 apiece.

Analysts cautioned that the move would keep on impacting telecom stocks in the near term as investors would perceive the move as a negative step.

The government will auction spectrum in two separate frequency bands - 900 MHz and 1,800 MHz. The auction is expected to generate Rs 11,300 crore for the national exchequer.