comscore Telecom sector to face consolidation, rise in debt
News

Telecom sector to face consolidation, rise in debt

Telecom industry will witness consolidation and Idea-Videocon spectrum trade is first of a series of such deals possible in the sector driven by the recent guidelines on spectrum trading, India Rating

  • Published: November 30, 2015 6:43 PM IST
telecom-industry

Telecom industry will witness consolidation and Idea-Videocon spectrum trade is first of a series of such deals possible in the sector driven by the recent guidelines on spectrum trading, India Ratings and Research (Ind-Ra) said today. The rating agency added that trading deals will lead to the rise in debt levels of the acquiring entities. Idea Cellular has announced purchase of the 4G airwaves in the Uttar Pradesh (West) and Gujarat circle from Videocon Telecommunications for Rs 3,310 crore last week, a deal which indicates that Videocon may be looking at exiting the telecom business. Also Read - Let our firms take part in 5G trials, China tells India

The availability of spectrum to launch 4G services in a fast growing 4G ecosystem will enable Idea to participate in the anticipated spurt in demand for data Also Read - BSNL Rs 199 prepaid plan introduced: Know benefits, validity and more details

“Similarly, other telecom operators would need to strengthen their spectrum capabilities in order to meet the growth in 4G services and competition from Reliance Jio Limited (R-Jio). Therefore, it is possible that Bharti Airtel and Vodafone India may show interest in purchasing spectrum in the circles remaining with Videocon,” Ind-Ra said. It added in Bihar and UP (East), Airtel may be a potential buyer of Videocon’s spectrum as Airtel’s current spectrum is in a block of less than 5 MHz and in Haryana, Vodafone may look to buy spectrum for the same reasons. Also Read - Landline users need to prefix '0' to call mobile phones starting January 2021: TRAI

Videocon has 5 MHz block of spectrum in the 1800 MHz band in four other circles of Bihar, Haryana, Madhya Pradesh and UP (East) post the Idea deal. The Idea deal will also set a benchmark for pricing the spectrum, as other operators may also look for opportunities to cash out their spectrum holding and retire debt. Ind-Ra notes that Idea’s purchase of the spectrum is at a significant premium to the last auction discovered price of similar spectrum.

The Rs 3,310 crore price paid by Idea is 98 percent higher than the spectrum prices discovered in March 2015 auction. Idea has gross debt of Rs 23,540 crore as of September 2015. “The current deal can potentially increase the total debt of the company by over 10 percent,” it added.

In case the other telecom players also tend to acquire spectrum at a substantial premium, the debt levels in such companies could increase further, it added. It further said heightened competitive intensity will also restrict any meaningful pricing improvement for the telecom sector in the near to medium term.

“At the same time, cash accruals from such investments will be back ended as 4G revenue will gain significance over the next three to five years and therefore could be credit negative in the short term,” it added.

Ind-Ra said the telecom sector, which is witnessing increasing competition in the data space is likely to take on additional capex to sustain growth.The ratings agency said acquisition of spectrum is strategic for Idea, enhancing its 4G capability on the 1800MHz band.

“With the acquisition of this spectrum, Idea will increase its 4G footprint from 10 to 12 circles, which currently contribute around 80 percent of the total revenues,” it said.

Gujarat and UP (West) are important markets for Idea as they together account for more than 11 percent of its total Indian subscriber base and contributes 15.5 percent of the company’s revenues. Also, for the quarter ended September 30, 2015, Idea’s revenue market share in Gujarat and UP (West) was 25.2 percent and 35.1 percent respectively, while the subscriber share was at 13.5 percent and 14 percent respectively, it added. Ind-Ra said Idea faces a credible threat in these circles from Reliance Communications which had acquired spectrum in the 800 MHz band in both these circles in the March 2015 auctions.

“The 800MHz band provides RCom a chance of becoming 4G capable on a superior band and thus potentially providing a better 4G experience than the incumbents thereby challenging their existing market position,” Ind-Ra said.

For the latest tech news across the world, latest PC and Mobile games, tips & tricks, top-notch gadget reviews of most exciting releases follow BGR India’s Facebook, Twitter, subscribe our YouTube Channel. Also follow us on  Facebook Messenger for latest updates.
  • Published Date: November 30, 2015 6:43 PM IST



new arrivals in india

Infinix Note 10 Pro
Infinix Note 10 Pro

16,999

Infinix Note 10
Infinix Note 10

10,999

Vivo Y73
Vivo Y73

20,990

OnePlus Nord CE 5G
OnePlus Nord CE 5G

22,999

iQOO Z3
iQOO Z3

19,990

Realme C25s
Realme C25s

9,999

Poco M3 Pro 5G
Poco M3 Pro 5G

13,999

Realme X7 Max 5G
Realme X7 Max 5G

26,999

Oppo F19
Oppo F19

18,990

Motorola Moto G40 Fusion
Motorola Moto G40 Fusion

13,999

POCO M2 Reloaded
POCO M2 Reloaded

9,499

OPPO A74 5G
OPPO A74 5G

17,990

Oppo A53s 5G
Oppo A53s 5G

14,990

Vivo V21 5G
Vivo V21 5G

29,990

Realme C25
Realme C25

9,499

Realme C21
Realme C21

7,999

Realme C20
Realme C20

6,799

Motorola Moto G60
Motorola Moto G60

17,999

iQOO 7
iQOO 7

31,990

Samsung Galaxy M42 5G
Samsung Galaxy M42 5G

21,999

Xiaomi Mi 11 Ultra
Xiaomi Mi 11 Ultra

69,999

Xiaomi Mi 11X Pro 5G
Xiaomi Mi 11X Pro 5G

39,999

Xiaomi Mi 11X
Xiaomi Mi 11X

29,999

Realme 8 5G
Realme 8 5G

13,999

Samsung Galaxy F02s
Samsung Galaxy F02s

8,999

Samsung Galaxy F12
Samsung Galaxy F12

10,999

POCO X3 Pro
POCO X3 Pro

18,999

Realme 8 Pro
Realme 8 Pro

17,999

Realme 8
Realme 8

14,999

Vivo X60 Pro Plus
Vivo X60 Pro Plus

69,990

Vivo X60 Pro
Vivo X60 Pro

49,990

Vivo X60
Vivo X60

37,990

OnePlus 9 Pro 5G
OnePlus 9 Pro 5G

64,999

OnePlus 9R 5G
OnePlus 9R 5G

39,999

OnePlus 9 5G
OnePlus 9 5G

49,999

Samsung Galaxy A72
Samsung Galaxy A72

34,999

Samsung Galaxy A52
Samsung Galaxy A52

26,499

Micromax In 1
Micromax In 1

10,499

Asus ROG Phone 5
Asus ROG Phone 5

49,999

Samsung Galaxy M12
Samsung Galaxy M12

10,999

Motorola Moto G30
Motorola Moto G30

10,999

Motorola Moto G10 Power
Motorola Moto G10 Power

9,999

Oppo F19 Pro Plus 5G
Oppo F19 Pro Plus 5G

25,990

Oppo F19 Pro
Oppo F19 Pro

21,490

Xiaomi Redmi Note 10 Pro Max
Xiaomi Redmi Note 10 Pro Max

18,999

Xiaomi Redmi Note 10 Pro
Xiaomi Redmi Note 10 Pro

15,999

Xiaomi Redmi Note 10
Xiaomi Redmi Note 10

11,999

Realme Narzo 30A
Realme Narzo 30A

8,999

Realme Narzo 30 Pro
Realme Narzo 30 Pro

16,999

Infinix Smart 5
Infinix Smart 5

7,199

Samsung Galaxy F62
Samsung Galaxy F62

23,999

Samsung Galaxy A12
Samsung Galaxy A12

12,999

Nokia 5.4
Nokia 5.4

13,999

Nokia 3.4
Nokia 3.4

11,999

Realme X7 Pro 5G
Realme X7 Pro 5G

29,999

Realme X7
Realme X7

19,999

Vivo Y31
Vivo Y31

16,490

Oppo Reno5 Pro 5G
Oppo Reno5 Pro 5G

35,990

Samsung Galaxy S21 Ultra 5G
Samsung Galaxy S21 Ultra 5G

1,05,999

Samsung Galaxy S21 Plus 5G
Samsung Galaxy S21 Plus 5G

81,999

Samsung Galaxy S21 5G
Samsung Galaxy S21 5G

69,999

Vivo Y12s
Vivo Y12s

9,990

Vivo Y51A
Vivo Y51A

17,990

Samsung Galaxy M02s
Samsung Galaxy M02s

8,999

Xiaomi Mi 10i
Xiaomi Mi 10i

21,999

Oppo A15s
Oppo A15s

11,490

Tecno Spark 6 Go
Tecno Spark 6 Go

8,499

Vivo V20 2021
Vivo V20 2021

24,990

Vivo Y20A
Vivo Y20A

11,490

Xiaomi Redmi 9 Power
Xiaomi Redmi 9 Power

11,999

Motorola Moto G9 Power
Motorola Moto G9 Power

11,999

Motorola Moto G 5G
Motorola Moto G 5G

20,999

Vivo V20 Pro
Vivo V20 Pro

29,990

Xiaomi Mi 10T
Xiaomi Mi 10T

35,999

Xiaomi Redmi 9i
Xiaomi Redmi 9i

8,299

Xiaomi Mi 10T Pro
Xiaomi Mi 10T Pro

39,999

Infinix Hot 10
Infinix Hot 10

9,999

Vivo V20 SE
Vivo V20 SE

20,990

Vivo V20
Vivo V20

24,990

Micromax In 1b
Micromax In 1b

6,999

Micromax In Note 1
Micromax In Note 1

10,999

OnePlus 8T
OnePlus 8T

42,999

Samsung Galaxy F41
Samsung Galaxy F41

15,499

Apple iPhone 12 Pro Max
Apple iPhone 12 Pro Max

1,29,900

Apple iPhone 12 Pro
Apple iPhone 12 Pro

1,19,900

Apple iPhone 12 Mini
Apple iPhone 12 Mini

69,900

Apple iPhone 12
Apple iPhone 12

79,900

Poco X3
Poco X3

16,999

Realme Narzo 20A
Realme Narzo 20A

8,499

Realme Narzo 20
Realme Narzo 20

10,499

Realme Narzo 20 Pro
Realme Narzo 20 Pro

13,999

Oppo F17
Oppo F17

16,990

Samsung Galaxy M51
Samsung Galaxy M51

22,999

Poco M2
Poco M2

10,999

Oppo F17 Pro
Oppo F17 Pro

22,990

Realme 7 Pro
Realme 7 Pro

19,999

Realme 7
Realme 7

14,999

Best Sellers