Government likely to raise Rs 90,000 crore from telecom auction: Crisil

MUMBAI: Telecom players will bid aggressively in the forthcoming spectrum auction and the government may be able to raise Rs 90,000 crore through the sale of radiowaves, credit rating agency Crisil said.

"With nearly half of Rs 1,200 billion annual revenues at stake for large operators, the importance of the forthcoming spectrum auction can't be overstated. Telecom operators will shell out more than Rs 900 billion to bag airwaves (radiowaves) in the upcoming telecom auction," it said in a note.

The government has set a very high base price for the auction, which is slated to help public finances in a big way, given the slow revenue growth during the current fiscal.

The bidding for four spectrum bands — 900 Mhz, 1800 Mhz, 2100 Mhz (used for 3G services) and 800 Mhz (used by CDMA operators) — is scheduled to start from March 4.

Winners will have to pay 30% of the amount upfront, while the rest will be in deferred payments spread over 10 years, after a two-year moratorium.

Crisil said the 900 MHz spectrum, which is considered most efficient for wireless telephony, is expected to see the biggest demand from telecom players.

However, it said the aggressive bidding poses a "herculean task" before operators to grow their blended average voice and data revenue per minute (ARPM) by five paise. In the last 18 months, companies have been able to grow their ARPM by 2-3 paise — to 47 paise — on tariff hikes and growing data usage.

"Another increase of 5 paise will not be an easy task in the face of intensifying competition, especially in data. Ability to increase ARPM will be a key monitorable," Crisil director Manoj Damle said in the note.

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