5G spectrum buy from Jio, Airtel credit neutral, Ind-Ra

The recently-concluded fifth generation or 5G auctions that offers a flexibility to telecom carriers to pay in 20 equal annual installments, is credit neutral for incumbents such as Reliance Jio and Bharti Airtel, the India Ratings and Research (Ind-Ra) Thursday said.

“The telcos have an option to defer the entire spectrum payment and pay in 20 annual equal installments, which would assuage the liquidity and capital requirement of telcos,” the rating firms said in a statement.

The agency believes both Reliance Jio and Bharti Airtel have the strong financial flexibility and adequate cash flow buffer to cover the annual spectrum liabilities and annual gross revenue dues.

The recently-concluded fifth generation or 5G auctions that offers a flexibility to telecom carriers to pay in 20 equal annual installments, is credit neutral for incumbents such as Reliance Jio and Bharti Airtel, the India Ratings and Research (Ind-Ra) Thursday said.

“The telcos have an option to defer the entire spectrum payment and pay in 20 annual equal installments, which would assuage the liquidity and capital requirement of telcos,” the rating firms said in a statement.

The agency believes both Reliance Jio and Bharti Airtel have the strong financial flexibility and adequate cash flow buffer to cover the annual spectrum liabilities and annual gross revenue dues.

The acquisition of 700MHz spectrum in all the 22 circles would provide a solid foundation to Reliance Jio for enhancing its 5G coverage and indoor network quality, even with lesser tower densification, Ind-Ra said.

The 700MHz frequency band could help Reliance Jio offer better speeds, and the telco could poach high-end users from rival Bharti Airtel, according to analysts.

In the recent 5G spectrum auction, nearly 50.831GHz of spectrum across various bands —700MHz, 800MHz, 900MHz, 1,800MHz, 2,100MHz, 2,300MHz —was purchased by the telcos for a period of 20 years. Indian Rating