Rivals unmoved even as Vodafone may pump in nearly Rs 16,500 crore in mega spectrum sale

After Vodafone group’s aggressive push in its Indian arm, it is now aiming to go full steam in the upcoming mega spectrum auction. Vodafone India will put a massive capital as much as Rs 15,000 crore in the upcoming spectrum sale. However, the rivals such as Bharti Airtel, Idea Cellular and Reliance Jio Infocomm are unfazed by Vodafone’s move.

Last week, the British mobile carrier infused Rs 47,700 crore through equity into its Indian subsidiary to reduce Vodafone India's debt of Rs 81,500 crore to half and equip it to continue its investments in spectrum and network expansion.

As analyst and experts have already told that there are enough 4G airwaves on offer and India’s second largest teleco has already said that it needs and appetite through a Rs 2,745-crore earnest money deposit (EMD) filing.

“Competitors must be aware that Vodafone's EMD filing suggests its total bid may be in the Rs 13,700-16,500-crore ($2-to-2.5 billion) range, which is in line" with industry expectations. The estimate is based on historical trends that suggest final bid amount is normally 5-6 times the EMD field,” a senior executive of a Big Four consultancy firm told ET.

Vodafone, on the other hand, needs a lot of cash to expand 4G networks to tackle the rising competition with Airtel and Reliance Jio.
"Based on Vodafone's EMD of Rs 2,745 crore, it could technically buy airwaves up to Rs 27,450 crore but past trends suggest spectrum winners normally use up a maximum 60% of EMD-based purchase capacity, which would work out to Rs 16,470 crore in Vodafone's case," an auctions strategist at a leading mobile carrier told ET.

Vodafone India lags both Airtel and Jio as it has 4G spectrums in nine out of 22 circles and only eight operates.

“Vodafone's rivals essentially see the huge equity infusion as an attempt to clean up Vodafone India's balance sheet by reducing debt/interest cost and improving leverage so that it can borrow more for organic or inorganic growth,” a senior executive of a rival telco said.
(image:indiatimes)