Airtel and Vodafone

Airtel, Idea, Voda, Others That Bid For Spectrum Will Have To Bear Higher Costs And Debt

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Telecom companies that bid 1,09,784 crore to retain and enhance their spectrum holdings will have to bear higher costs and debt, reduce future expansion and increase tariffs, global credit rating company Moody’s Investors Service said.

The thousands of crores of rupees that top carriers Bharti Airtel, Vodafone India, Idea Cellular and Reliance Communications committed to buy airwaves in the auction that ended on March 25 will limit their ability to make additional investments over the next 12-24 months, which could in turn slow down the rollout of 3G and 4G networks in India. “This high cost is credit-negative for the country’s telecom operators because it will increase their debt and costs and reduce their ability to fund future expansion,” Moody’s said in a note on Monday.

“Although we expect that the companies will raise tariffs in an effort to recover their spectrum costs, we believe the increases will be gradual, leaving the companies’ debt levels bloated for some time,” it added. Original post at ET Telecom

Wahengbam Rorrkychand

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