According to a report released by the international credit rating agency, Moody Vodafone and Telenor?s successful bid in the just concluded spectrum auction is ?credit positive? says news reports.
As per the report the 2G spectrum won by Vodafone and Telenor will help the former improve coverage and latter to increase its market share. Moody?s analysis states that the spectrum auction?s outcome is credit positive for Telenor because new circles will help it add to its market share in India, which was just under 10 per cent at the end of September, 2012.
Also, the additional spectrum won by Vodafone will help the operator enhance its coverage in India, including rural areas, at a relatively low cost.
Further, the report says that Telenor?s revenues from Indian market are likely to double in the next three years. At present India accounts for about 5 per cent of Telenor?s revenues, which is likely to increase to about 10 per cent by 2015. The rating agency observes that critical to the positive credit implications of the purchase is Moody?s expectation that the Indian business (of Telenor) will turn earnings before interest, taxes, depreciation, and amortisation break-even in 2013 or 2014 at the latest and will become a self-funding operation.
According to Moody with a population of about 600 million and mobile penetration of only 40 per cent in areas where Telenor has won spectrum, the operator has strong growth opportunities.
The report says that India is the world?s second-largest wireless market after China, and for Vodafone, the country is one of the biggest markets with nearly 153 million subscribers. Moody, however, asserts that the regulatory risk for both companies in India is substantial, since the regulators have been ?unpredictable and volatile? in the past.
