India auction proposals could leave operators with $50 billion debt says report

A new report estimates that telecoms operators in India could be hit with debt of up to nearly $50 billion over the next five years if auction rules outlined by the nation’s regulatory body last month are carried through.

Produced by consultants PwC for the industry lobby group the Cellular Operator Association of India (COAI), the report also suggest the proposed auction rules could see operators increase average prices for consumers by almost 60% or by as much as 200% in urban areas.

The report goes on to show that India’s mobile operators already have an estimated debt of $33.7 billion due to expensive infrastructure investment and high competition. The proposed auction rules could lead to a tenfold increase in the price of a licence placing further pressure on the nation’s main telecoms companies, which include Vodafone, Bharti airtel and Idea.

As operators continue to voice concerns, India’s telecoms commission is scheduled to meet this Thursday to discuss the proposals.

Meanwhile, Augere Wireless looks set to sell its 4G spectrum and become the latest company to exit the Indian market. The company, which is backed by France Telecom and private equity funds, has reportedly shut down its India operations and asked its employees in the country to resign.

Qualcomm is also said to be in advanced talks with Bharti airtel to sell its 4G venture in the country.