Costly Auction To Spike Telcos’ Debt

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The government may be reaping a record windfall from spectrum sale, but the auction across four bands is set to increase the debt burden on telecom operators from an estimated Rs 2.6 lakh crore at present to around Rs 3.4 lakh crore, an increase of around 31%.

The expensive affair, which promises the government a bounty of over Rs 1 lakh crore, will see telcos raise voice and data tariffs in all probability as they take cover for the fresh debt that they take on their books. And, this fresh debt comes just a year after telecom companies spent over Rs 61,000 crore in the auction held in February last year.

Industry sources said banks – who already have an exposure of Rs 80,000 crore to the telecom sector – are reluctant to lend and may take positions on a “case-by-case basis”. Companies such as Tata Tele, Aircel and Reliance Communications carry heavy debt on their books when compared to their revenues and may face difficulty in raising fresh loans. Tata Tele and Aircel have been disqualified from bidding in all circles in view of their negative net worth. Original post at ET Telecom

Wahengbam Rorrkychand

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