Crisil says High Spectrum Payout to Bloat Telcos' Debt Ratios

Posted By: Gizbot Bureau

    Aggressive spectrum bidding by the top three operators would adversely impact their capital structure in the short-term, though bagging airwaves is good for them in the long-term, ratings agency Crisil said today.

    Crisil says High Spectrum Payout to Bloat Telcos' Debt Ratios

    "In the near-term their capital structure will be impacted," it said in a note, adding even the part payments for the spectrum will stretch their key capital ratios.

    Recommended: Top 10 Upcoming Mobile Phones To Launch In India Soon (2015)

    It said the debt to pre-tax profit ratio for these three, which include Bharti Airtel, Vodafone and Idea Cellular, would go up to 3.9 times from the 3.3 times before the auction.

    The three leading operators are reported to have already paid Rs 7,690 crore, including Bharti's Rs 4,725 crore, Vodafone's Rs 1,030 crore and Idea's Rs 1,935 crore.

    Crisil says High Spectrum Payout to Bloat Telcos' Debt Ratios

    The total winning bids for the three stand at Rs 89,396 crore of the overall Rs 1.10 lakh crore in bids.

    Recommended: Top 10 Most Expensive Mobile Phones Available in India (2015)

    Much of the bids were for renewal of spectrum, while in some cases, the operators have also added fresh spectrum with an eye on the future.

    Crisil says High Spectrum Payout to Bloat Telcos' Debt Ratios

    "While the trio has had to cough up a lot of money for this, they also got spectrum for 20 years. Additionally, the spectrum they already hold beyond this does not come up for renewal in the medium-term," it said, expecting the three companies to consolidate their positions in the market.

    Recommended: Top 20 Most Awaited Android 5.0 Lollipop Smartphones to Launch in India Soon

    Their debts will "bloat" and it will be a challenge to get the required revenue growth due to stiff competition, which is only going to increase with the entry of Reliance Jio, Crisil said, adding the key monitorable will be the average revenue per minute which the three operators manage.

    Source: PTI

    Read More About: spectrum telecom technology news
    X

    Stay updated with latest technology news & gadget reviews - Gizbot

    We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Gizbot sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Gizbot website. However, you can change your cookie settings at any time. Learn more