The spectrum auction in 1800 MHz, 900 MHz, 2100 MHz and 800 MHz band, which commenced on Mar. 4, 2015 and ended on Mar. 25, 2015 after 115 rounds over 19 days, has fetched over Rs 1098.74 billion.
Commenting on the conclusion of the spectrum auction in India, Tom Phillips, chief regulatory officer, GSMA, said, ''Unfortunately these high prices will put increased financial pressure on operators and ultimately have a negative impact on consumers, reducing the value derived from the spectrum and hindering future economic growth and social gain in India. With the auction now concluded, the GSMA looks to the Indian Government to enable a business and regulatory environment built around trust and certainty, which will facilitate fresh investment by mobile operators to expand mobile broadband services throughout the country. Mobile connectivity is a critical enabler for building a digitally empowered society and knowledge economy and must inevitably be at the heart of Prime Minister Modi's vision for a truly Digital India.''
Nomura research, said, ''Regardless, earnings for both Bharti and IDEA face pressure in the next one or two years, we think. The stocks have (in the past two weeks) re-rated and may still see further upside on the hope and scope of improvement. That said, as seen in the past and with many other regional telcos, until there is earnings support and visibility, the re-rating may not last. We maintain Reduce on both stocks, which is not only based on the impact of these auctions, but also the potential impact from the R-Jio launch.''
Edelweiss Research, said, ''While Bharti, Vodafone and Idea dominated 900MHz and 2100MHz spectrum auctions, RJIO, RCOM and TTSL were lead players in 800MHz. In our view, lower participation of smaller operators clearly portends consolidation in the industry. High competition from incumbents to garner as much spectrum footprint as possible also implies that the industry is eyeing high data growth and higher realisations as the industry consolidates. We believe, superior spectrum footprint imparts Bharti a distinct advantage. We have 'BUY/SO' recommendations/ratings on Bharti and Idea.''
HDFC Securities, said, ''Incumbents have bid for Rs 900 billion worth of spectrum, which amounts to 87% of the total bid amount. However, we feel that this is a pyrrhic victory for incumbents, as competition is unlikely to abate and tariff increases will be challenging. This, coupled with RJio's launch of data services by 2015-end, will result in sluggish EBITDA growth for Bharti/Idea. Bharti and Idea's FY15 net debt to EBITDA now stand at 3.0x and 3.6x.''
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