ICRA responds to TRAI’s spectrum recommendations

ICRA’s views on spectrum auctions by Ankit Jain, Assistant Vice President & Sector Head – Corporate Ratings, ICRA Limited:

“TRAI has recommended spectrum auctions with one of the largest quanta of spectrum on offer (more than 100,000 MHz). A lot of new bands have also entered the spectrum auction process viz. 600 MHz, 700 MHz, MHz and 28 GHz bands, which contribute more than 80% of the total value of spectrum to be put to auctions. The reserve prices have been materially revised downwards by around 35-40% from the last spectrum auction and despite this, the total spectrum on offer at reserve price is valued at around Rs. 5.0 lakh crore for 20 years. Even at a modest participation in this auction, the debt levels of the industry are likely to elevate further to Rs. 4.8 lakh crore by March 2023, despite the improvement in the cash flow generation post the tariff hikes as well as the deleveraging initiatives undertaken by the telcos. The Government of India had budgeted around Rs. 52,800 crore as non-tax receipts from the telecom sector for FY2023, of which it is estimated that around Rs. 26,000 crore is from upfront payment of auctions proposed in the current fiscal.”

CT Bureau