The much awaited spectrum auction, wherein 8 companies are bidding to acquire airwaves in four bands, started on Wednesday. The auction is the biggest ever sale of 2G and 3G airwaves which may fetch the government over Rs 82,000 crore.
The spectrum sale becomes crucial for many companies that have their licences expiring in several circles. The entry of Reliance Jio, which has deposited the highest earnest money ahead of the auctions (indicating it may aggressively bid) may also be a factor of concern.
“We believe the top three players (Airtel, Vodafone, Idea) will be spending about USD 3-4.5 billion each at the auction,” Nitin Soni of Fitch Ratings said. “Of the three, Idea is the most vulnerable given that its licences in nine circles, which contribute about 70 percent of revenues, are expiring.”
“The balance sheet is not an issue for these companies. They generate a significant amount of free cash flow,” Sanjay Chawla of JM Financial said.
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