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Increased Payouts for Auctions May Force Telcos to Raise Call Rates by Around 10%: Morgan Stanley

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Acute scarcity of 900 MHz airwaves in the upcoming auction will lead to over-bidding and could drive up the winning price of this premium bandwidth to as much as four times the February sale price of 1800 MHz spectrum, which would force telcos to raise call rates by around 10%, said Morgan Stanley.

“900 MHz spectrum, typically, allows for lower capex and higher EBITDA margins, but due to its limited availability, we could see overbidding, which is why we are raising spectrum payout forecasts for 900 MHz from three times to four times the February ’14 market price of 1800 MHz airwaves,” Morgan Stanley analysts said in a recent note.

As a result of the increased payouts for the auctions, the brokerage expects operators to raise tariffs by 10%, post the sale. “With 4 trillion industry minutes, another 2-3 paise tariff hike will take care of the increase in interest and depreciation costs for the upcoming auctions,” Morgan Stanley analysts said in a note to clients. Original post at ET Telecom

Wahengbam Rorrkychand

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Website: http://www.blog.tonsetelecom.com

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