The high bids for 3G spectrum made by telecom companies will haunt them for some time to come. The high licence fee coupled with the capital expenditure required for rollout of 3G services will push some of the firms into debt. Earnings for the next few years are also expected to be lower because of high debt. While there are no clear winners from the auction some of the players have come out ahead. Aircel and Idea have been winners in terms of getting 3G coverage for their current revenue base, says India Infoline.
The two companies have managed to win 3G licen-ces in areas that account for 79 per cent and 86 per cent of their current revenues, notes the brokerage. Also, the fact that no single player has managed to bag all the circles could be a catalyst for M&A activity in the sector later on. Earnings of the auction winners are likely to fall for the current year, notes Edelweiss, a brokerage house. For financial year 2010-11, the brokerage estimates that Bharti Airtel’s earnings will fall by 3.5 per cent. Idea and RComm are likely to witness a drop of 11 per cent and 4.5 per cent respectively in profits, because of the higher cash outgo, the broker says.
Showing posts with label 3G spectrum. Show all posts
Showing posts with label 3G spectrum. Show all posts
Friday, May 21, 2010
Thursday, May 20, 2010
3G gets Centre Rs 67,718 crore
After 34 days of suspense, the auction for 3G spectrum is finally over with the government richer by Rs 67,718.95 crores from the proceeds of the sale. This is almost twice what the government had originally hoped to raise.
The extra amount will help reduce India’s fiscal deficit to 4.9 per cent from the 5.5 per cent that was projected earlier. The finance minister, Mr Pranab Mukherjee, said the extra money will give him more elbow room.
3G spectrum or radio waves would allow telecom firms to offer high-speed Internet and other premium services such as making video calls.
The cost of a pan-India 3G licence is Rs 16,751 crores but no single company managed to bag a licence in every circle. Bharti, Reliance Communications and Vodafone have bagged the bulk of 3G licences; they were successful in bagging the three available slots in the prime circles of Delhi and Mumbai. Idea, Tata and Aircel have also been successful in bagging many of the major circles. Bharti will pay out the highest amount for its spectrum purchases — Rs 12,295 crores.
Delhi and Mumbai were the highest value circles and went for a price of Rs 3,317 crores and Rs 3,247 crores respectively. Five other circles — Maharashtra, Gujarat, Andhra Pradesh, Karnataka and Tamil Nadu — were sold for more than Rs 1,000 crores.
Etisalat and Videocon, both new operators, failed to get any 3G spectrum at all while Aircel and S Tel bagged a few service areas.
In 2008, the telecom ministry had awarded all-India 2G spectrum to some players for Rs 1,651 crore, which has since flared into a major issue.
The extra amount will help reduce India’s fiscal deficit to 4.9 per cent from the 5.5 per cent that was projected earlier. The finance minister, Mr Pranab Mukherjee, said the extra money will give him more elbow room.
3G spectrum or radio waves would allow telecom firms to offer high-speed Internet and other premium services such as making video calls.
The cost of a pan-India 3G licence is Rs 16,751 crores but no single company managed to bag a licence in every circle. Bharti, Reliance Communications and Vodafone have bagged the bulk of 3G licences; they were successful in bagging the three available slots in the prime circles of Delhi and Mumbai. Idea, Tata and Aircel have also been successful in bagging many of the major circles. Bharti will pay out the highest amount for its spectrum purchases — Rs 12,295 crores.
Delhi and Mumbai were the highest value circles and went for a price of Rs 3,317 crores and Rs 3,247 crores respectively. Five other circles — Maharashtra, Gujarat, Andhra Pradesh, Karnataka and Tamil Nadu — were sold for more than Rs 1,000 crores.
Etisalat and Videocon, both new operators, failed to get any 3G spectrum at all while Aircel and S Tel bagged a few service areas.
In 2008, the telecom ministry had awarded all-India 2G spectrum to some players for Rs 1,651 crore, which has since flared into a major issue.
Friday, January 29, 2010
3G: Auction put off to next fiscal
The government has postponed auction of spectrum for 3G telephony to the next fiscal. The auction was expected to bring in Rs 35,000 crore to the exchequer.
According to senior officials in the Department of Telecom, Law Minister Veerappa Moily, who is a member of the Empowered Group of Ministers (EGoM), has opined that the auction should he held when the spectrum is available.
Telecom Minister A. Raja could not be contacted immediately for his comments. Officials, however, said that the auction is expected to take place in August-September this year.
The Ministry of Defence had agreed to vacate the spectrum only during middle of this year.
The EGoM, headed by Finance Minister Pranab Mukherjee, had decided to allow four private telecom firms for the next generation mobile telephone services (3G) and had made a provision for garnering up to Rs 35,000 crore from the sale of airwaves in the current fiscal.
The postponement of 3G spectrum auction to 2010-11 is likely to have some impact on the government’s finances and the fiscal deficit which is pegged at 6.8 per cent of the GDP.
The EGoM on 3G spectrum held several meetings in the past two months showing urgency to hold auction for the airwaves despite differences between ministries of telecom and defence over the number of blocks to be suctioned.
The EGoM had also decided that spectrum would be alloted to the winners simultaneously in August to maintain a level-playing field and the same was endorsed by all the members, including the Law Minister, sources said.
Last week, the government had also allowed prospective 3G bidders to raise funds from domestic markets, which could later be refinanced through debts raised abroad making it easier for the firms to arrange finances.
The external commercial borrowings (ECBs) norms were relaxed considering the short window available between the date of application for the 3G auction and the date of payment by successful bidders.
Sources also said that some of the leading Indian telecom firms were pushing for 3G spectrum auction to next financial year in view of the global slowdown and increased competition which have put pressure on their revenues.
Asked to name the companies who had approached the government to postpone the auction to next fiscal, sources declined to give details.
The two telecom PSUs (BSNL and MTNL) have been given the 3G spectrum and both are offering services across the country with MTNL in two metros of Delhi and Mumbai and BSNL in rest of India.
According to senior officials in the Department of Telecom, Law Minister Veerappa Moily, who is a member of the Empowered Group of Ministers (EGoM), has opined that the auction should he held when the spectrum is available.
Telecom Minister A. Raja could not be contacted immediately for his comments. Officials, however, said that the auction is expected to take place in August-September this year.
The Ministry of Defence had agreed to vacate the spectrum only during middle of this year.
The EGoM, headed by Finance Minister Pranab Mukherjee, had decided to allow four private telecom firms for the next generation mobile telephone services (3G) and had made a provision for garnering up to Rs 35,000 crore from the sale of airwaves in the current fiscal.
The postponement of 3G spectrum auction to 2010-11 is likely to have some impact on the government’s finances and the fiscal deficit which is pegged at 6.8 per cent of the GDP.
The EGoM on 3G spectrum held several meetings in the past two months showing urgency to hold auction for the airwaves despite differences between ministries of telecom and defence over the number of blocks to be suctioned.
The EGoM had also decided that spectrum would be alloted to the winners simultaneously in August to maintain a level-playing field and the same was endorsed by all the members, including the Law Minister, sources said.
Last week, the government had also allowed prospective 3G bidders to raise funds from domestic markets, which could later be refinanced through debts raised abroad making it easier for the firms to arrange finances.
The external commercial borrowings (ECBs) norms were relaxed considering the short window available between the date of application for the 3G auction and the date of payment by successful bidders.
Sources also said that some of the leading Indian telecom firms were pushing for 3G spectrum auction to next financial year in view of the global slowdown and increased competition which have put pressure on their revenues.
Asked to name the companies who had approached the government to postpone the auction to next fiscal, sources declined to give details.
The two telecom PSUs (BSNL and MTNL) have been given the 3G spectrum and both are offering services across the country with MTNL in two metros of Delhi and Mumbai and BSNL in rest of India.
