3G foray seen adding to debt burden of cellular operators

3G foray seen adding to debt burden of cellular operators

Crisil reaffirmed the ratings of telcos following the auction, after which operators will pay Rs 67,719 crore to the government for the 3G spectrum radio waves.

Capex on networks
Crisil added, however, “given that these investments fee plus capex on new networks will primarily be debt-funded, the players’ financial risk profiles are expected to be under pressure over the medium-term.”

Meanwhile Fitch said, the high up-front 3G licence fee will have “a negative impact on the credit metrics of most private operators in the short- to medium-term..., and their financial leverage can accordingly be expected to deteriorate”.

Further it said all the telcos are facing margin pressures due to intense price competition in the over-crowded wireless industry. However, higher non-voice revenues from new value added services and more spectrum availability are the key benefits for the winning operators.
Press trust of India

Auction winners told to pay by May 31
The Indian government Friday approved the results of the auction of spectrum for third generation (3G) telecom services and asked the winning firms to make payments by May 31, reports IANS from New Delhi.

The auction, which concluded Wednesday, has fetched the exchequer Rs.67,718.95 crore. The amount is set to prune the government’s fiscal deficit, pegged at Rs.381,408 crore for this year. “The government has approved the results of the 3G spectrum auction,” said a statement from the Department of Telecommunications (DoT).

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