Indian telcos to spend Rs 1 lakh crore for spectrum over next 2 years

Indian telcos to spend Rs 1 lakh crore for spectrum over next 2 years

Telecom companies are expected to shell out Rs 1 lakh crore for snapping up spectrum during the forthcoming auctions and a little over one-third of this capex will be spent this fiscal year itself, says a report.

Half of this amount will be externally funded over the next two years and almost 75% of this will be spent by private telcos, said the report by rating agency Crisil.

"In the current fiscal, the outgo towards spectrum acquisition will be Rs 37,000 crore of the Rs 1 trillion. Though this is lower than the budgetary estimates of around Rs 56,000 crore, this still is a significant outgo for an industry reeling under Rs 4 trillion of debt as of March 2016," the report said.The government plans to put on the block over 2,300 MHz of spectrum across seven frequency bands at the auction expected to be held over the next few months. This also makes the highest quantity of airwaves that's being sold at one go.

"Unlike previous auctions, operators this time do not face business continuity issues. Yet we expect reasonably healthy participation because incumbents will ramp up their 3G and 4G spectrum holdings ahead of Reliance Jio's entry.

"Telcos are already facing increased network congestion in circles with high data consumption like key metros, which account for 60% of the data traffic," Ajay Srinivasan, a Director at the rating outfit, said.

"Therefore, augmenting network capacity and spectrum holdings will be critical for maintaining their competitive position. Overall, telcos are expected to fork out Rs 1 trillion."

Crisil expects bidding in the 700 MHz to be extremely selective with players preferring the less pricey 1800 MHz.