The Idea-Vodafone combine will be the biggest beneficiary of the recent government move to extend the repayment tenure for payment of spectrum liabilities.

On March 7, the Union cabinet had okayed a relief package for the telecom sector. It gave operators, who are burdened with high debts and dealing with cut-throat competition, more time to pay for the spectrum bought in auctions.

The Centre has now extended the period to 16 years, including four years of moratorium. Earlier, the payment had to be made within 10 years, including a two-year moratorium.

While it is expected that the move will benefit Reliance Jio, Bharti Airtel and the other incumbents too, analysts at CLSA said in a note that the Idea-Vodafone combine will be the biggest beneficiary.

"Among operators, Idea-Vodafone are the biggest beneficiaries given their significantly higher spectrum liabilities of an estimated USD 14 billion, compared with Bharti Airtel's USD 7 billion and Reliance Jio's USD 4 billion,'' Deepti Chaturvedi and Akshat Agarwal said in a report.

They estimated that the extension of the repayment period will boost Idea-Vodafone's cumulative cash-flow by Rs 10,500 crore or USD 1.6 billion over 2019-21.

Bharti Airtel's cumulative cash-flows over the same period could rise by Rs 5,000 crore to Rs 6,900 crore, while in the case of Reliance Jio, this number will increase by Rs 2,700 crore.

However, the analysts forecast that in the case of Jio, the cash flow could be negative because of the potential acquisition of Reliance Communications' wireless assets.

According to the foreign brokerage, for 2018-19, the government has budgeted collections of Rs 48,700 crore or USD 7.6 billion from the telecom sector, of which deferred spectrum payments are estimated at Rs 24,800 crore or USD 3.9 billion.

"Under the revised timelines, we estimate deferred payments in 2018-19 at Rs 18,900 crore - a shortfall of Rs 6,000 crore, which will increase to Rs 7,400 crore from 2019-20. To offset this, the government may bring forward its plans to auction spectrum in the second half of 2018-19,'' it added.

This auction could see both Reliance Jio and Bharti Airtel bidding for the spectrum. – Telegraph India


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