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Operators could skip 5G spectrum auctions if prices are too high, says Fitch Ratings

September 28, 2018
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In a recent statement, Fitch Ratings has stated that Indian telecom operators could skip the 5G spectrum auctions if prices are too high. According to Fitch, since companies are likely to increase investment in 5G spectrum depending on the 5G spectrum asset price, purchasing spectrum at higher prices may further burden the already indebted balance sheets of operators over the next two years.

Further, as per Fitch, the new National Digital Communication Policy 2018 (NDCP) will most likely benefit the sector by addressing tax and fee burdens on the industry and making it easier for operators to meet rapidly rising data demand.

Furthermore, NDCP’s broadband coverage expansion plan, which is funded by the Universal Service Obligation Fund, will substantially benefit the telecom operators. According to Fitch, there will be implementation challenges in the NDCP’s plans to connect 600,000 villages to the broadband network and establish two million Wi-Fi hotspots in rural areas and another one million in urban areas. Nonetheless, the development of this infrastructure could significantly increase the broadband adoption rate, which at present is very low in rural areas.

Also, the firm sees price competition to ease in the medium term following the emergence of three large operators – Bharti Airtel, Reliance Jio Infocomm Limited and the merged entity of Vodafone-Idea, having a combined revenue market share of over 90 per cent.

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