On Tuesday, the Rating agency Fitch said that the telecom giant Airtel may not bid for premium 700MHz band spectrum in the coming auction not only because of its high price but also because of its limited availability. In a statement Fitch Ratings said that we do not expect Bharti to bid in the upcoming auction of 700MHz in India, given the high indicative price for this spectrum, limited device availability and the company’s ownership of alternative spectrum of 1800MHz/2300MHz to roll out 4G services.
The government is preparing for the next round of spectrum auction which will be held in July. In this spectrum they expect to sell airwaves worth INR 5.66 lakh crore. A record high base price of INR 11,485 crore per MHz for the 700MHz band has been approved by Telecom Commission. If at the price that Trai has suggested, all available radio waves get sold then this itself will earn the government an amount of INR4 lakh crore. In a statement, the agency said Fitch Ratings has affirmed Bharti Airtel’s long term foreign currency issuer default rating and senior secured rating at BBB. The same rating was also affirmed for Bharti Airtel International Netherlands BV’s bonds. Bharti Airtel’s Africa operation is managed by this entity.
The ability of a company to pay back debt is indicated by the credit rating. AAA rating denotes highest credit quality, while BBB is granted for good credit quality meaning it indicates that expectations of default risk are currently low.With the issue of call drops and other mandatory regulations enforced by TRAI, the regulatory body, several Telecom Companies are being forced to take unconventional decisions. Whether Airtel’s decision to not participate in the auction for the 700 MHz band is unconventional or whether it bears sweet dividends can be only found with time.
