The Malaysia government’s plan to raise cash by re-farming spectrum and holding an auction has riled operators and sent their share prices tumbling, wiping MYR9.45 billion ($2.28 billion) off the top three operators’ market cap the day after the announcement.

Malaysia’s plan to auction spectrum, announced by Prime Minister Najib Razak as part an updated budget to boost government revenue, caught investors by surprise. He said in a speech that the government will optimise revenue from the telecoms spectrum through a “redistribution and bidding process”, which will be implemented soon.

Kuala Lumpur-based TA Securities telecom analyst Paul Yap told Nikkei Asia Review that “the revelation that it will be via a bidding process comes as a surprise” as the government has previously never had a spectrum auction.

The move to re-farm the spectrum was widely expected. The country’s 3G (2.1GHz) 15-year licences are up for renewal in 2018-20, while the 2.6GHz spectrum’s five-year assignment period is up for review in December 2017.

An auction is likely to result in mobile operators paying billions of ringgit to retain or acquire more 900MHz and 1.8GHz spectrum.

CIMB analyst Foong Choong Chen told Edge Markets: “This is a negative surprise, as our recent conversation with the Malaysian Communications and Multimedia Commission suggested that the regulator was quite happy and did not intend to disrupt the good progress made by the existing mobile operators in building out their mobile data networks.”

CIMB Equities Research said that Maxis and Celcom stand to lose the most, given the potential cash outlay for their larger spectrum holdings. While DiGi could obtain more 900MHz spectrum, it may have to fork out a lot of cash to win some in the auction, the Star Online reported.

Axiata’s shares fell 8.5 per cent on Thursday and Friday, while Maxis suffered a 6.4 per cent decline and Digi saw its shares drop 4.3 per cent over the two-day period.

The government’s move to generate funds from an auction are similar to efforts by other countries, such as Pakistan, which has been pushing for a year to hold a spectrum sale that operators aren’t keen to join.