Top telecom players Bharti Airtel, Vodafone, Idea Cellular and Reliance Communications may skip bidding for 700 MHz spectrum due to a high base price suggested by Trai, said rating agency Fitch on Fri
Top telecom players Bharti Airtel, Vodafone, Idea Cellular and Reliance Communications may skip bidding for 700 MHz spectrum due to a high base price suggested by Trai, said rating agency Fitch on Friday.
Trai has recommended $1.7 billion per MHz for pan-India 700 MHz spectrum. “Fitch Ratings believes that efficiency gains from deploying 4G services on 700 MHz will be insufficient to offset the relatively high price,” it said.
It said the price for 700 MHz spectrum could exert further pressure on participating telecom companies’ balance sheets and cash flow, and limit their ability to invest in capex over the medium term.
“The top four telcos —Bharti Airtel, Vodafone, Idea Cellular and RCom — may hesitate to bid for 700 MHz spectrum, given their stretched balance sheets and need to preserve cash in light of impending competition from the entry of Reliance Jio in March-April 2016,” said Fitch.
It said that the 700 MHz spectrum auction may not be attractive to telcos, given limited device availability and that telcos possess alternative spectrum (850 MHz or 1800 MHz or 2300 MHz) to roll out 4G services. It pointed out that market leader Bharti owns about 40 per cent of the private telcos’ 900 MHz, and will offer 4G services in 1800 MHz and 2300 MHz.
Reliance Jio has access to the pan-India 800 MHz or 850 MHz spectrum.
The rating agency further pointed out that Trai’s approval in September 2015 to allow spectrum sharing and trading, could make bidding in spectrum auctions unattractive.
