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Following close on the heels of skyrocketing 3G auction bid numbers,
the telecom industry has raised concerns that operators may have
exceeded a safe price point, as it was reported that they will need to
cough up at least Rs 50,000 crore in debt equity to be able to sustain
the prices they are bidding for.
However, even while this concern is real, considering an economy that
has recently emerged from the carnage of the global downturn-it is one
that is unfounded-as telecom analysts tell us that operators will not
really face an European
auction deja vu syndrome, as it is much easier to fork out funds in
India.
for 3G should have stopped at the beginning of last week itself when
the 100% participation mark was reached. However, I don't think that
operators will default on payment as it is relatively easier to raise
funds in India. I believe there will be a mixture of debt, bound and
convertible. But this will be more on the debt borrowing side, and not
on the equity side, as has been reported by some.”
Besides, operators have a choice to opt out of the auctions as well, if
the levels go beyond the limit an operator is willing to pay.
Remarks Satyen Gupta, Chief Regulatory Advisor, India and SAARC Region, BT, “Operators will be able to raise the desired bank
amount through bank guarantee or equity, and I believe they will stop
after a saturation point, which some operators have done, by dropping
out of the auction race. However, even if operators choose to continue
bidding, the rates will not hurt them, as it will go into their sunk
costs-which is a part of
(not
and
therefore it gets adjusted over a period of about twenty years or
more, depending on the life of the license. Thus, it does not effect
day-to-day operations, and the RoI will not be dependent on a sudden
spurt in subscriber additions.
Experts also believe that the incremental income will not justify
in five to ten years, but over a long period of time it will depend on
retaining the high-end subscriber base and upgrading existing networks
through increase in data usage.
On the occasion of International Telecom Day, bids for one set of 3G
licenses reached Rs 15, 814 crore ($3.5 bn), after 172 rounds. As per
yesterday's figures, one set of bids reached a total of Rs 161.64 bn ($
3.54 bn) and the government is set to earn Rs 653 bn from the
auction.Â
berylm@cybermedia.co.in