Market Report: Investors spooked as Vodafone admits spending £1.9bn to renew spectrum rights in Delhi

Questions over costs spooked Vodafone investors yesterday after the telecoms giant paid above the board for Indian spectrum licences.

Vodafone spent £1.9 billion to renew spectrum rights in Delhi, Mumbai and Kolkata, close to double pre-auction estimates. While the price won’t dent its bulging balance sheet, Société Générale pointed out that the fact this was a renewal auction signalled further costs down the road. The broker noted that the “charge for spectrum usage rights is not ‘one-off’ in nature, and the cost of renewing the rights should be taken into account”. Vodafone dialled down 3.05p to 218.4p.

Imperial Tobacco also went up in smoke following speculation that it could spin-off its European logistics business, Logista.

Barclays described 2014 as a “transition year” for the bank, which fell 51p to 2,300.5p.

And it was a second day of sell-offs at Rolls-Royce, despite Liberum suggesting the reaction to its full-year results was “overdone”. Fresh news on the Serious Fraud Office’s probe into alleged corruption at the engine maker’s Asian operation meant investors couldn’t shake their reservations. Rolls-Royce stalled 20p to 1,024.5p.

But buoyant mining and oil stocks kept the blue-chip index from sliding. Mexican-focused precious metals miner Fresnillo capped off a golden week with another day at the top of the table. Rising gold and silver prices have seen its shares soar this week and yesterday it added 49p to 971.5p. Randgold Resources was also on the up, by 87p to 4,774p.

Antofagasta, up 33p to 938.25p, and Glencore Xstrata, 6.05p to 338.1p, also made gains.

Oilfield services company Petrofac benefited from an upgrade from Berenberg. The broker reckons concerns over margins and risk are starting to ease and upgraded the company to a buy. Petrofac drilled up 52p to 1,317p.

The FTSE 100 was flat overall, adding just 4.2 points to 6,663.62.

On the mid-cap index Petra Diamonds announced it had auctioned a 29.6-carat blue diamond for $25.6 million. Petra added 1.9p to 149.9p.