According to a report by Moody’s Investors Service, spectrum liabilities of telecom carriers in the Asia Pacific (APAC) region will continue to grow over the next 1-2 years due to the upcoming auctions and steep spectrum prices.
Meanwhile for emerging markets like China, India, Indonesia, Malaysia and Philippines, spectrum liabilities to gross debt will increase to more than 16 per cent in 2021 and 2022 from 11.6 per cent in 2020 and 9.3 per cent in 2018, assuming India completes its 5G spectrum auction in 2022, Moody’s noted.
Currently, Telecom Regulatory Authority of India (TRAI) is undergoing consultations on the auctions and related modalities.
As per Moody’s report, assuming Bharti Airtel spends up to Rs 370 billion at 5G auctions of which 40 per cent is paid up-front, deferred spectrum and adjusted gross revenue (AGR) liabilities could make up about 55 per cent of the telco’s adjusted consolidated debt.
The upcoming auction and steep spectrum prices may also weaken leverage, if a company uses debt to fund capital spending as well as spectrum purchases.
