Despite mega-debt, telcos to bid in big spectrum auction

Telecom majors Bharti Airtel, Vodafone and Idea Cellular are learnt to have submitted their applications to participate in the largest-ever spectrum auction scheduled to start from October 1, 2016."Airtel, Vodafone and Idea Cellular have submitted their application forms," an official source said.

Interested bidders were asked to submit their applications for the auction that will see airwaves worth Rs 5.63 lakh crore go on sale.Telecom Minister Manoj Sinha feels that service providers not buying airwaves will not be able to take on competition and expects an enthusiastic participation.

He has said companies need spectrum to give good quality service, increase revenue and, "maintain a good image".The government will start from October 1 the mega spectrum auction in which mobile frequencies in all bands - 700 Mhz, 800 Mhz, 900 Mhz, 1800 Mhz, 2100 Mhz and 2300 Mhz - will be put on the block.

The finance ministry in the budget pegged the revenue at Rs 98,995 crore from the telecom space, which includes Rs 64,000 crore from the auction of about 2,354.55 Mhz of spectrum and the rest from various levies and services this financial year. All the radiowaves being put up for auction can be used for high-speed 4G services.

This is the first time the government will auction premium airwaves in the 700 Mhz band. This is considered as the most premium as the cost of providing service is one-third of 3G under the 2100 Mhz band.

 The 700 Mhz band alone has potential to fetch bids worth Rs 4 lakh crore if all the spectrum in it gets sold at the base price although most analysts have predicted a muted response in this band, given the exorbitant pricing.

As per rating agency ICRA, the consolidated debt level of the industry stood at around Rs 3,80,000 crore in December 2015 against Rs 2,90,000 crore in March 2014. Going forward, considering the estimated level of participation in the auction, the industry debt would go up to around Rs 4,60,000 crore.

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