Tuesday, March 31, 2015

Indian Mobile Market to Consolidate from 10 to 6 Constestants

The Indian mobile market will consolidate from about 10 contestants to six in the wake of the recent spectrum auction, says Fitch Ratings, while consumer prices are likely to rise.

“We believe that telcos are likely to raise prices in response to high spectrum prices,” said Fitch Ratings. Also, “most telcos will report negative free cash flow in 2015 as they need to pay a quarter of the committed amount up front.”

The consolidation will happen because spectrum acquisitions will put pressure on balance sheets and cash flow, limiting ability to invest in networks and compete.

The consumer price hikes will occur because the operators have to pay for the spectrum. And much of the acquired spectrum was re-acquired only to support existing operations.

India's spectrum auction raised US$17.7 billion, a sum that now will have to be raised or shifted from other uses, and will prove too heavy a burden for some contestants, Fitch believes.

The biggest four mobile companies--Bharti Airtel, Vodafone, Idea Cellular and Reliance Communications--won 82 percent of the licenses. Bharti spent about US$4.7bn. Vodafone invested US$4.2 billion.

Idea Cellular committed US$4.9 billion, while Reliance spent  US$693 million.

Bharti now has the best spectrum assets with its ownership of about 40 percent of the 900 MHz spectrum considered best for coverage, Fitch says.   

No comments:

Post a Comment

Is Sora an "iPhone Moment?"

Sora is OpenAI’s new cutting-edge and possibly disruptive AI model that can generate realistic videos based on textual descriptions.  Perhap...