Insiders are confirming that the 3G auctions are likely to be held before the end of the current financial year, March-2010 even though there is no clarity on 2G license and spectrum for foreign bidders and the issue of incremental spectrum allocation. It is a bit surprising to me that despite the fact 3G and BWA auction proceeds are likely to fall short of initial estimates, Government is keen on the auction.
For Telecom companies, which are burning cash faster than ever in the ongoing Tariff war, having a sound Balance Sheet is a must as my analysis and channel checks suggest that there will be aggressive bidding in few select circles. However, on PAN India basis, for now assume no foreign telcos throw their hat, weak / overstretched balance sheets by Idea, RCom and new operators will keep the bids more realistic.
Bharti Airtel, with over 30% Revenue Market share is the company that is best positioned by Balance Sheet apart from Vodafone India with its virtually unlimited resource to fulfill its ambition of integrated telecommunications operations. However, if the company were to bid for Warid in Bangladesh as per media reports at $900mn [Not even worth half of it, in my view], Mittal is inviting trouble for sure.
Reliance Communications – Anil Ambani’s over ambitions and under performance [poor Wireless ARPU] has made the largest shareholder family a worried lot. The Balance Sheet is already stretched even considering the case of 2G CAPEX. 3G auctions and subsequent capex may pressure the financials further, however, some are of the belief that SELL-OFF in Reliance Globalcomm is inevitable in the near future even at lower valuations.
Idea Cellular – Repeatedly seeking clarity along with Tata Telservices on Spectrum policy before 3G, but the Government is in no mood to reply. For the time being comfortable for 2G expansion though its balance sheet may get stretched in case of 3G auctions. Like Vodafone, it is a Now or Never opportunity for Idea to become an integrated telco.
The Bidding Conspiracy – No I really cannot confirm it but extremely reliable sources have indicated that Telcos are already engaged in pre-bid talks to split the circles where each will bid aggressively and the other members going out of the bid after participating [To avoid investigations and aftermath]. Post 3G Auctions, the scenario will be prior to that of 2006 where operators had tied up for 2G mobile roaming services and this will likely be a reality again in the 3G era.