BUSINESS

Reliance Jio Launch May Derail India's Largest Spectrum Auction: Report

Indebted telcos are under additional financial pressure after RJio's entry

16/09/2016 9:05 AM IST | Updated 16/09/2016 1:59 PM IST
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Rupak De Chowdhuri / Reuters

Reliance Jio's aggressive launch combined with over indebted balance sheets of major telecom operators may throw off India's largest spectrum action scheduled on October 1, a government official told Mint.

The government-led auction will put up for sale spectrum in seven frequencies estimated to be worth about Rs 5.6 lakh crore, in an offer that would have helped operators expand into high-speed 4G voice and data services.

Among the seven frequencies on offer is the expensive 700 MHz band of spectrum, for which it expects only lukewarm interest because of its high price, according to the official.

The official told Mint, the total spectrum on sale "is four times the holding of Reliance Jio and three times the present holding of (Bharti) Airtel. This is the kind of spectrum we are putting up so we don't expect all of it to be sold."

It's unclear if the government would schedule more auctions.

Telecom operators are likely to preserve cash in order to take on competition from new entrant Reliance Jio, which is threatening to steal market share in a big way through the offer of free voice calls and cheap data packages. Reliance Industries Chairman has vowed to sign up 100 million customers in record time.

Many analysts have warned about the financial impact of Reliance Jio's launch on rival companies, particularly revenues from voice calls, which is already under pressure as internet apps replace voice calls.

According to a Bloomberg report, India's 12 wireless companies have more than $61 billion in debt, which has increased 41 percent since March 2014.

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