Birds sit on cables connected to a mobile phone telecommunications tower. (Photographer: Dhiraj Singh/Bloomberg)

Why Vodafone Idea Thinks Telecom Firms Won’t Participate In Spectrum Auctions

Consolidation in the Indian telecom industry won’t compel companies to participate in spectrum auctions, according to the country’s largest mobile operator.

Today, adequate spectrum is available while the number of operators has reduced which means you can buy spectrum when you need it, Akshaya Moondra, chief financial officer of Vodafone Idea Ltd., told BloombergQuint in an interaction. “You don’t need to hoard spectrum anymore.”

The number of telecom players fell to three from ten due to a wave of consolidation and market exits triggered by the launch of Reliance Jio Infocomm Ltd., which initially offered free data followed by dirt-cheap tariffs. Moondra said that this was the reason the entire block of 5G spectrum went unsold in the last round of auction. India hopes to complete 5G spectrum auctions by August 2019 and roll out services a year later, according to various media reports.

Vodafone Idea currently has a spectrum portfolio of nearly 1850 MHz—the largest in the industry. The service provider believes that it can create additional capacity on its portfolio without buying any spectrum.

The company is also raising nearly Rs 25,000 crore via a rights issue to reduce its debt and leverage. However, even after this fund infusion, its leverage ratio would remain as high as 26.5 times.

Along with the merger synergies of Rs 8,400 crore, the company is also looking to boost its earnings before interest taxes depreciation and amortisation by cutting costs and increasing revenue. The company said that it wouldn’t require another fund infusion.

Watch the interaction here:

Also read: Will Rs 25,000-Crore Rights Issue Solve Vodafone Idea’s Problems?