Companies & Sectors
Limited participation likely for telecom spectrum auctions: ICRA
New Delhi : Forthcoming spectrum auctions are likely to attract limited participation from telecom companies, and lead to the rise of industry debt to Rs.4,60,000 crore, credit rating agency ICRA said on Thursday.
 
"Given the estimated level of participation in the auctions, the industry debt would rise to around Rs.4,60,000 crore, further stressing the capital structure of the industry and deteriorating the debt protection metrics," said ICRA's senior vice president, Corporate Sector Ratings, Sabyasachi Majumdar in a statement.
 
Expecting a sale of spectrum worth Rs.60,000 to Rs.80,000 crore, he said the industry's consolidated debt level rose from Rs.2,90,000 crore in March 2014 to around Rs.3,80,000 crore by December 2015.
 
"This rise in debt is expected to worsen the gross debt/OPBDITA levels of the industry to around 6.5 times as against the current levels of 5.4 times," added Majumdar.
 
According to ICRA, the industry is expected to face cashflow pressures and thereby require additional funding to sustain network rollout momentum.
 
ICRA highlighted that some telecom companies have taken inorganic de-leveraging steps by selling stake in certain assets, which, if successful, can bring Rs.30,000 crore to the industry.
 
Interestingly, the industry is facing stress on capital structure at a time when operating metrics are also facing pressure.
 
Gross Average Revenue Per User (ARPU) declined from Rs.183 in Q3 2015 to Rs.173 in Q3 2016.
 
Though data ARPU rose from Rs.145 to Rs.162 during the period under review, voice ARPU fell from Rs.140 to Rs.127, said ICRA.
 
"But this data ARPU is driven by increase in usage, while the realisations remain under pressure. Going forward, growth in subscriber base and usage is expected to slow down, even though the realisations are not expected to grow materially," it said.
 
Further, the entry of Reliance Jio Infocomm is expected to drive the competition madder and aggravate the already declining voice and data revenue realisations for telecom companies.
 
However, the recently proposed merger/spectrum trading deals which can lead to consolidation in the sector is a ray of hope, it said.
 
Smaller telecom companies looking to sell their unutilised spectrum holdings to larger players interested in improving spectrum holding outside auctions can bring in network efficiencies, it added.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Competition between banks, NBFCs in retail credit to rise: ICRA
Kolkata : Competitive pressures on retail-focussed NBFCs are to intensify while banks are increasing focus on retail segments due the pressures on corporate credit, according to a report released on Thursday by credit rating agency ICRA.
 
"Banks which account for 56 percent of industry retail credit are also increasing their focus on retail segments due the pressures on corporate credit. Competitive pressures on retail-focussed NBFCs are to intensify," it said, adding public sector banks which are in pressure by weak asset quality and earnings and large capital requirements could increase lending to the less capital intensive retail segment. 
 
"Retail credit from non-banking finance companies (NBFCs) is expected to grow by 19-22 percent in the 2016-17 fiscal starting from April this year," it said.
 
According to the agency, retail credit growth is likely to be picked up by improvement in commercial vehicle segments, better growth for gold loans and microfinance sector along with unsecured loans and loans against property.
 
Retail credit from NBFCs stood at Rs.4.7 trillion at the end of calendar year 2015 with a year-on-year growth of nearly 19 percent. 
 
The agency estimates NBFCs will need to mobilize Rs.2.2-2.4 trillion funding in 2016-17, out of which bond mobilisation could be to the extent of Rs.600-700 billion.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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PPF, EPF & VPF Remain Attractive after the Budget measures were annulled
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