|Bid||5.50 x 0|
|Ask||0.00 x 0|
|Day's Range||5.35 - 5.70|
|52 Week Range||2.40 - 14.40|
|Beta (5Y Monthly)||0.76|
|PE Ratio (TTM)||N/A|
|Earnings Date||Jul 24, 2020 - Jul 28, 2020|
|Forward Dividend & Yield||N/A (N/A)|
|Ex-Dividend Date||Sep 22, 2016|
|1y Target Est||45.58|
(Bloomberg Opinion) -- Bungling the rescue of a bank that has more than $20 billion in deposits is probably the costliest own goal India has scored since its foolish November 2016 ban on most currency notes. Arm-twisting government-controlled State Bank of India to inject capital into failing Yes Bank Ltd. was the only option left for New Delhi. But the halfhearted bailout just may turn a bad dream for savers into a nightmare for the financial system. The biggest error in the plan executed Thursday night was to trap depositors. It was both unnecessary and dangerous. Telling people they can’t withdraw more than 50,000 rupees ($675) for a month may have prevented a run at Yes. But savers will now lose trust in all but a handful of blue-chip Indian banks. Smaller, privately owned lenders will see a profit-crunching flight of cheap deposits. Those receiving this inflow of funds will wonder how to deploy them.The restrictions placed on Yes also disrupted the digital payments network. Walmart Inc.-owned PhonePe, which relied on Yes to move customers’ money across bank accounts, was among services that experienced outages. The same authorities who tirelessly extol the virtues of going cashless failed to see that Yes Bank was a major intermediary at the back end. If only the regulators had called up PhonePe as well as various ticketing, food delivery and other other services that used Yes as their banking technology partner — not to share inside information but merely to ask their risk folks to start reading newspapers. When the central bank announced the contours of the rescue, a third issue sprang up. Yes Bank’s additional Tier 1 bonds are to be made worthless as part of the rescue. Some holders are pensioners who were missold these perpetual notes. SBI could have done its government masters a favor and accommodated these investors by issuing them new shares. To be the only ones to take the fall when depositors and senior bondholders are being made whole and existing equity isn’t fully written off may be contractually valid in this instance. But enforcing this punishment will mean future investors in Indian perpetual bonds will charge much more. A valuable capital-raising avenue for India will have a no-go sign until the market swallows the shock. IndusInd Bank Ltd. cancelled a meeting this week to approve an AT1 issue. The fourth howler lies in SBI’s weekend plan for Yes Bank’s revamp. It will invest $332 million into an enterprise that urgently needs $2 billion to $3 billion to survive. There’s a promise of more, but for now SBI’s check will cover roughly half of Yes Bank’s exposure to just one client teetering on the brink of bankruptcy: Vodafone Idea Ltd.Such a lame rescue won’t reassure depositors. Once restrictions on withdrawals are lifted, depositors will look elsewhere. The bank’s asset book is toast. If its deposit franchise also turns worthless, then which private investor will provide growth capital? I don’t see an alternative to a merger with SBI. Not announcing one now may temporarily cap SBI’s downside, but the pain will only be postponed, to judge by state-owned Life Insurance Corp.’s takeover of IDBI Bank Ltd.Fifth, it’s not clear if India is looking at the Yes crisis as an opportunity to let banks ensure their survival by a timely restructuring of their assets and liabilities. A previous attempt at enacting a law for handling financial failure itself failed. Public opinion was rightly against turning depositors into shareholders. Still, it can’t be SBI or Life Insurance Corp. to the rescue every time. The question to ask is whether allowing Yes Bank’s now-deposed board to issue shares at a hefty discount to the market price could have attracted willing investors. When the banking and securities regulators agree, they must be able to instruct boards to even wipe out existing shareholders in the public interest.After four years of forcing banks to acknowledge their soured exposure, and to take firms to the bankruptcy tribunal or restructure them outside of courts, India still can’t declare victory: Vulnerable corporate debt is large at $140 billion. While a bulk of the problem predates Prime Minister Narendra Modi’s 2014 election victory, his scrapping of 86% of the currency has made things worse. Shadow banks expanded recklessly by borrowing the savings that rushed into banks and mutual funds. Real-estate and infrastructure developers refinanced their stuck projects cheaply. Excesses accumulated. Trouble erupted two years later: First infrastructure financier IL&FS Group and then Dewan Housing Finance Corp. blew up. The flames next gutted a small cooperative bank, and are now torching Yes, a major lender. One of the unacknowledged goals of demonetization was to reduce the Reserve Bank of India’s currency liabilities by $45 billion to release resources for recapitalizing banks. But the RBI got practically all the outlawed notes back. As the Yes bailout shows, the windfall morphed into a penalty. Evaluating unintended consequences of draconian policies is the final lesson as India is seized by renewed risk aversion and financial mistrust.To contact the author of this story: Andy Mukherjee at firstname.lastname@example.orgTo contact the editor responsible for this story: Matthew Brooker at email@example.comThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- India’s great telecom melee was bad enough as a brawl between service providers and the state, with operators complaining about the government’s outlandish claims on their past revenue. Now, consumers have jumped into the fray. A confusing three-cornered fight could lead to ugly outcomes: The country’s broken financial system would take a fresh hit; new 5G networks could be delayed; and the government’s annual revenue from the sector might get squeezed.This week, New Delhi wants nearly 1.5 trillion rupees ($21 billion) in back license fees and spectrum usage charges, including penalties, interest and interest on unpaid interest. Before they lost the case in India’s Supreme Court, the telcos maintained the government’s interpretation of what it was owed under the 1999 revenue-sharing agreement to be too broad and unfair because it included even their non-telecom revenue, such as interest and dividend income. It's a Pyrrhic victory for the government because not all the money it wants is coming. Of the 15 firms facing these long-contested demands, most have shut down, sold out or ended up insolvent. All eyes are now on Vodafone Idea Ltd., one of the three private-sector mobile services companies still standing. It has to pay 530 billion rupees by Jan. 23, by government estimates. Even taking Vodafone Idea’s own calculation of the liability at 442 billion rupees, the loss-making carrier’s net debt soars to a life-threatening 1.6 trillion rupees. It may not be able to meet all its obligations.The threat of a bankruptcy was real when I wrote about Vodafone Idea’s grim prospects in November. With the two large shareholders — Britain’s Vodafone Group Plc and Indian billionaire Kumar Mangalam Birla — reluctant to throw more good money after bad, the equity value of the business is hurtling toward zero.Telcos have requested the country’s top court to extend the payment terms. Even if Vodafone Idea stays afloat thanks to a last-minute compromise, customers have read the writing on the wall. The mobile carrier lost 36 million subscribers in November. And that was before all three players raised prices in December. As the churn gets busier, the hypercompetitive Indian market will effectively turn into a duopoly. Bharti Airtel Ltd. and Reliance Jio Infocomm Ltd. will see their market shares settle at around 35% and 45%, respectively, by March 2021, according to Jefferies Financial Group Inc.Where will this leave Vodafone, or the $1.7 billion that the government earns from the current No. 2 player as annual spectrum revenue? Of the many creditors that have exposure to the telco, Yes Bank Ltd. is particularly vulnerable. Saddled with bad loans, the Indian bank is struggling to raise funds as its capital buffers wear dangerously thin. If potential white knights get cold feet because of the lender’s outsize telecom exposure (as much as 29% of shareholders’ funds, including 18% for Vodafone Idea), then the country’s financial system may be looking at a big confidence shock. Worryingly, future profitability of the telecom industry also remains unclear. Blame it on the cost-conscious Indian consumer. With telcos raising prices, using one SIM card for calls and another for data isn’t cost effective any more. Demand will consolidate, and some of it may vanish altogether. Bharti Airtel recently introduced a 179 rupee plan, valid for 28 days, which offers 2 gigabytes of data, unlimited calls, and comes packaged with 200,000 rupees of life insurance. This is a way to lessen the sticker-price shock for entry-level subscribers, especially in semi-urban and rural areas, who are being nudged to trade up from the current 149 rupee basic plan. Expect more such bundled offerings as both Bharti and Jio try to raise their average revenue per user to around 300 rupees, where the economics starts to make more sense.That’s still a ways off, though. Jio, whose aggressive entry three years ago with free voice calls and cheap data triggered cutthroat competition, garnered revenue per user of just 128 rupees — not even $2 — in the December quarter, practically flat from a year earlier. Being a new entrant, Jio isn’t saddled by the government’s revenue demands that have come to haunt Vodafone Idea and, to a smaller extent, Bharti. Until Mukesh Ambani, the deep-pocketed tycoon behind Jio, turns his attention from chasing market share to maximizing returns on his $50 billion foray, pricing will stay irrational and new investment will remain constrained.Although Bharti has raised new equity and convertible debt, at more than 1 trillion rupees, its net debt is onerous. It’s hard to see strong demand at the government’s auction of 5G airwaves in April. Vodafone’s long-standing tax dispute with New Delhi has been a cautionary tale. The business imploding because of another instance of government heavy-handedness will send a fresh bad signal about India’s business climate, though for the country’s telecom industry, the outlook will remain somber regardless of whether Vodafone Idea survives or not.To contact the author of this story: Andy Mukherjee at firstname.lastname@example.orgTo contact the editor responsible for this story: Rachel Rosenthal at email@example.comThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Follow Bloomberg on Telegram for all the investment news and analysis you need.India’s Supreme Court ruled that wireless carriers including Bharti Airtel Ltd. and Vodafone Idea Ltd. need to pay $13 billion of dues to the government, rejecting an appeal by operators struggling to stem losses and reduce debt.A three-judge Supreme Court bench headed by Justice Arun Mishra on Thursday dismissed review petitions filed by the telecommunication companies against the October verdict, according to updates on the court’s website. Under that ruling, Vodafone Group Plc’s India venture has to pay $4 billion, while Bharti Airtel got a $3 billion bill -- all due on Jan. 24.The court also rejected requests by telecom companies for rehearing the petition seeking relaxations on penalties sought by the government and deadline for the payment.The court’s rebuff is the latest setback for the survivors of a brutal tariff war sparked by the 2016 entry of billionaire Mukesh Ambani’s Reliance Jio Infocomm Ltd., an upstart that disrupted the industry with free calls and cheap data. Both Bharti Airtel and Vodafone Idea, with a combined net debt of about $30 billion, reported record losses in the quarter through September, and were counting on the court to reverse its order.“We wonder how weaker operators like Vodafone Idea will make this payment, and not that Bharti Airtel is getting any respite as the amount has to be paid up,” said Gaurang Shah, vice president at Geojit Financial Services Ltd. “It isn’t easy to raise tariffs and retain customers. It remains to be seen how companies now respond to this decision because the court has twice spelled it out for them.”Eroding ViabilityFor two decades, the operators had challenged the way authorities calculated their annual adjusted gross revenue, a share of which is paid as license and spectrum fees. With the October ruling, the court upheld the government’s method, while rejecting the companies’ plea to exclude revenue from non-telecommunications businesses.“We are evaluating filing a curative petition,” Airtel said in a statement after the ruling. “The industry continues to face severe financial stress and the outcome could further erode the viability of the sector as a whole.”The government had raised a total demand of around 920 billion rupees ($13 billion) against all telecom operators, including defunct ones, according to filings in the court.Here’s a list of companies and the amount they have to pay to the government:Bharti Airtel recently raised $3 billion from sales of shares and convertible bonds to help meet the payment deadline. On the other hand, Vodafone Idea’s billionaire Chairman Kumar Mangalam Birla warned last month that the company would have to cease operations and head for insolvency if the government doesn’t provide relief measures.Last year, Vodafone Idea had raised 250 billion rupees from a rights issue.Vodafone’s India Unit Chairman Says End is Near If No Support“Vodafone may have some cash through rights issue but it won’t be enough to meet the overall dues,” said Rajiv Sharma, an analyst at Sbicap Securities. “If there’s not enough relief, then it is going to be a matter of time before they shut down.”In the past decade, India has seen a consolidation in the telecommunications industry. Three non-state operators are left now, from about a dozen four years ago. While Vodafone’s local unit announced its merger with Birla’s Idea Cellular Ltd. in 2017, Aircel Ltd. and tycoon Anil Ambani’s Reliance Communications Ltd. slipped into bankruptcy last year. Others including Norway’s Telenor group and UAE’s Etisalat group exited the market.(Updates with background throughout.)\--With assistance from P R Sanjai and Nupur Acharya.To contact the reporters on this story: Upmanyu Trivedi in New Delhi at firstname.lastname@example.org;Ragini Saxena in Mumbai at email@example.comTo contact the editors responsible for this story: Sam Nagarajan at firstname.lastname@example.org, ;Unni Krishnan at email@example.com, Bhuma ShrivastavaFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Shares of Vodafone Idea Ltd. and rival Bharti Airtel Ltd. rallied after the wireless carriers said they planned to raise tariffs starting next month, the first increase since the entry of billionaire Mukesh Ambani into India’s telecommunications market in 2016 triggered a price war.Vodafone Idea surged as much as 30% in Mumbai on Tuesday, while Bharti Airtel rallied as much as 6.6%. Reliance Industries Ltd.’s shares rose more than 3% to a record on optimism Reliance Jio Infocomm Ltd. will also benefit from higher tariffs. “Mobile data charges in India are by far the cheapest in the world even as the demand for mobile data services continues to grow rapidly,” Vodafone Idea, formed by the merger of Vodafone Group Plc’s local unit with billionaire Kumar Mangalam Birla’s Idea Cellular Ltd., said in a statement late Monday. Higher rates will become effective Dec. 1, it said.Separately, a Vodafone Idea spokesman declined to disclose details about the possible tariff increase and plan details. The move comes after the wireless carrier reported the worst quarterly loss in Indian corporate history last week. The announcement of the increase was followed by Bharti Airtel, which also said it will raise phone rates from next month.Vodafone Idea last week took a one-time charge related to a $4 billion demand from the government, leading to a net loss of 509 billion rupees ($7.1 billion) in the September quarter. Saddled with about $14 billion of net debt, Vodafone Idea is fighting for survival after India’s top court last month ordered it and others including Bharti Airtel to pay fees that the government said were due from prior years.Indian telecom companies have been faced with high debt and low prices especially after the entry of Jio. That drove some to bankruptcy and led to the merger of others such as Vodafone with Idea. The acute stress in the sector has been acknowledged by all stakeholders and a high-level government panel is looking into providing appropriate relief, Vodafone Idea said Monday.“The key will be Jio’s response to the price hike. We think Jio could likely follow,” Jefferies analysts wrote in a note. Reliance has potential to gain from already above average valuation, thanks to the possibility of higher telecom tariffs and its debt reduction plans, Morgan Stanley analysts wrote.(Adds Reliance shares in second paragraph, analysts comments in last)To contact the reporters on this story: P R Sanjai in Mumbai at firstname.lastname@example.org;Swansy Afonso in Mumbai at email@example.comTo contact the editors responsible for this story: Sam Nagarajan at firstname.lastname@example.org, Abhay Singh, Ravil ShirodkarFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Last week, you might have seen that Vodafone Idea Limited (NSE:IDEA) released its second-quarter result to the market...
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(Bloomberg) -- India won’t back down from collecting $13 billion of past dues from debt-laden telecom carriers because the industry is not under stress, a government official with knowledge of the matter said, a move that could deepen Bharti Airtel Ltd. and Vodafone Idea Ltd.’s financial woes.India expects the carriers to pay up within 90 days as ordered by the Supreme Court last month, the official said, asking not to be identified, as the discussions are private. A panel of top bureaucrats could look at deferred payment plan for some of the dues, the person said.The government’s stand about the health of the industry mirrors comments made by billionaire Mukesh Ambani’s Reliance Jio Infocomm Ltd., which has said it has a “divergent view” from its rivals. High fees, frequent flip-flops and endless tax demands over the years have driven most operators aground. From over 10 operators few years ago, India has just three non-state players left with two of them saddled with a mountain of debt.Vodafone Group Plc’s Indian venture has $14 billion worth of obligations, while Bharti Airtel is rated junk by Moody’s Investors Service. “All telecom operators have asked for requisite help in reducing” the financial stress, Vodafone Idea said last month.The “extraordinary scenario” being shown is “just a machination to extract relief,” Reliance Jio said in a letter to the minister of communications on Oct. 31.Bharti Airtel’s shares fell 3.3% in Mumbai on Wednesday. Vodafone Idea lost 8.3% while Reliance Industries Ltd. slid 0.9%. The benchmark S&P BSE Sensex rose 0.6%.In the latest instance, the court ordered operators to pay dues using a disputed method for calculating the annual adjusted gross revenue, a share of which is paid as license and spectrum fees. It upheld the government’s method that includes income from non-telecom businesses like dividend from income and capital gains from the sale of assets while rejecting a plea to exclude them.Spectrum PaymentStill, the official said the government is working on a plan to reduce the license fee and providing a two-year moratorium on pending spectrum payments. The proposal will be sent to the finance ministry first before it is taken up by the cabinet, the official said, adding that this may happen in the current financial year.The telecom ministry spokesman didn’t immediately respond to requests for a comment.A panel of senior government officials is examining feasibility of deferring payment for airwaves that are due by March 2021 and March 2022 as demanded by telecom companies, a government official told reporters last week. It will also consider the demand for reduction in spectrum usage levies and the Universal Service Obligation Fund charge.On the introduction of 5G airwaves, the official said there will be no delay in auction, which is due this financial year, and that the government isn’t presuming the telecom sector is under stress. The reserve price for 5G spectrum will not be lowered, he said.India has fallen behind China and some other countries in plans to introduce 5G, super fast networks seen as essential to developing factory automation, autonomous driving and other artificial intelligence applications.(Update with share performance in sixth paragraph)To contact the reporter on this story: Ragini Saxena in Mumbai at email@example.comTo contact the editors responsible for this story: Arijit Ghosh at firstname.lastname@example.org, Unni Krishnan, Sam NagarajanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Reliance Jio Infocomm Ltd. won more subscribers to become India’s biggest telecom operator, as companies prepare for the planned rollout of a 5G network next year.Reliance Jio’s subscriber base grew to 331.3 million in the quarter ended June, the company reported July 19. That’s higher than nearest rival Vodafone Idea Ltd., which on Friday said its users fell to 320 million from 334.1 million last quarter.Launched three years ago by Mukesh Ambani, Asia’s richest man, Reliance Jio’s rapid growth has been fueled by more than $36 billion in spending. Deep pockets helped the company lead intense competition that has driven India’s data tariffs to the lowest in the world. Bruised by the price war, firms have either been forced to shut down or combine with other players, such as the local unit of Vodafone Group Plc that merged with Idea Cellular Ltd.Read more: The $84 Billion Dilemma Vexing India’s Three Telecom TycoonsReliance Jio became No. 2 in May, when its market share increased to 27.8%, according to data released by the industry regulator Trai. Vodafone Idea’s market share was 33.4% and Bharti Airtel Ltd. had 27.6% of the wireless market.Most of Asia’s largest wireless carriers are in the process of testing 5G networks, with plans to introduce them commercially in 2020.To contact the reporter on this story: Ronojoy Mazumdar in Mumbai at email@example.comTo contact the editors responsible for this story: Nasreen Seria at firstname.lastname@example.org, Jeanette RodriguesFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Vodafone Idea Ltd. has hired Bank of America Corp. and Morgan Stanley to help sell its fiber assets as India’s largest mobile carrier by users seeks to bolster its finances, people familiar with the matter said.The bankers will initiate discussions with potential buyers for the fiber assets, which could be valued at as much as 130 billion rupees ($1.9 billion), the people said, asking not be identified as the talks are private.A final decision has yet to be made on the valuation and the stake to be sold, and the company could bring in more banks for the sale, the people said. Representatives for Vodafone Idea and Morgan Stanley declined to comment, while a Bank of America spokesman didn’t immediately respond to requests for comments.A deal, if successful, would help the phone-service provider add to the funds it’s been raising to pare debt and fend off rivals Bharti Airtel Ltd. and billionaire Mukesh Ambani’s Reliance Jio Infocomm Ltd., an upstart that upended the market after its debut in 2016. In April, Vodafone Idea raised 250 billion rupees from a rights issue, building a war chest as India readies for a 5G network.Vodafone Idea, which was formed by the merger of Vodafone Group Plc’s local unit with tycoon Kumar Mangalam Birla’s Idea Cellular Ltd., has reported losses in every quarter since the deal was announced in 2017.Both Bharti Airtel and Vodafone Idea top the list of Asian peers with highest borrowings, according to data compiled by Bloomberg.Mumbai-based Vodafone Idea is in the process of transferring all of its fiber assets into a separate company before the sale. The unit has about 158,000 kilometers (98,177 miles) of fiber, according to a presentation posted on its website in February.Shares of Vodafone Idea fell 5.4% on Thursday, the biggest drop in almost two months. The stock declined 50% this year, while India’s benchmark Sensex index rose 7.8%.(Updates to add shares performance in the final paragraph.)To contact the reporters on this story: Baiju Kalesh in Mumbai at email@example.com;P R Sanjai in Mumbai at firstname.lastname@example.orgTo contact the editors responsible for this story: Fion Li at email@example.com;Sam Nagarajan at firstname.lastname@example.orgFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- After racking up $59 billion of net debt to survive a brutal war in the world’s second-biggest phone-services market, some of India’s billionaires are bracing for more as their next battle looms: 5G.India seeks to raise $84 billion this year from a sale of airwaves -- most of it for the new technology tipped to revolutionize connectivity. That’s posing a conundrum for the carriers controlled by tycoons including Mukesh Ambani, Asia’s wealthiest man. Investment would mean more borrowings, but the reward could be revenue streams never seen before.Operators may soon decide how much more pain they can endure for a high-speed wireless network that can offer better user experience in streaming, gaming and entertainment in a market where Netflix Inc. to Amazon.com Inc. are making inroads. With applications ranging from manufacturing to education and health care, 5G could be the catalyst for India’s digital economy that has the potential to reach $1 trillion by 2025, according to a report by Deloitte.‘Competitive Parity’“Any player missing on the 5G service offering is likely to see erosion of market share,” said Alok Shende, a Mumbai-based principal analyst for telecom at Ascentius Insights. “There’s all the more case for maintaining competitive parity to remain in the game. Offering a forward path to customers is important.”Bharti Airtel Ltd. and Vodafone Idea Ltd., the two biggest carriers, didn’t respond to request for comments on their 5G plans, while Ambani’s Reliance Industries Ltd. said it won’t comment on the spectrum auction.While 5G offers potential in augmented reality, virtual reality, connected cars, autonomous drones, smart homes and cities, the real promise for a country like India lies in rural areas, said Prashant Singhal, global head of telecommunications at Ernst & Young.The technology could address some of the basic challenges due to lack of infrastructure in health care and education. For instance, an experienced surgeon in a major urban hospital can advise an in-theater doctor in a small town to perform a surgery over a real-time 5G connection or a holographic image of a teacher could be beamed to a classroom in a village, he said.Most of Asia’s largest wireless carriers are in the process testing 5G networks, with plans to introduce them commercially in 2020.World’s FirstSouth Korea’s SK Telecom Co. unveiled its 5G network for public use in April, calling it the world’s first such full commercial roll out. China issued 5G licenses to its three main operators earlier this month, raising the prospect of services starting as early as this year. India plans to deploy its own next year.The immediate challenge in India would be the investment needed for the network, which the Telecom Regulatory Authority of India estimates could be as much as $70 billion. That amount will further dent the finances of operators that are in the midst of efforts to pare debt piled over the past decade.“Spectrum pricing is too expensive in India and the telecom companies will have further stress in their balance sheets if they wish to participate in the upcoming auction,” Rajan Mathews, chief of Cellular Operators Association of India, the industry group representing the carriers, said in an interview Tuesday. “But they have an option of buying at a later date.”Deferred PurchaseIn India, successive governments running chronic budget deficits have relied on airwave auctions to replenish their coffers. If authorities don’t garner enough demand for the airwaves, they usually cut the price by as much as 40% in the subsequent round, according to Deepti Chaturvedi, an analyst at CLSA India Pvt. The preferred option may be to defer the purchase, she wrote in a note earlier this month.Despite a market with more than 1.1 billion subscribers, competition has driven data tariffs to less than a dollar for 1 GB -- the cheapest in the world. The monthly average revenue per mobile user is also among the lowest -- at about $2 -- compared with about $8 in China and at least $40 in the U.S.The environment got tougher after Ambani, 62, as part of his empire expansion, unleashed Reliance Jio Infocomm Ltd. in 2016 with free calls and even cheaper data. As a result, many incumbents retreated or merged. Reliance Communications Ltd., run by Ambani’s younger brother, is now facing bankruptcy. The consolidation has left three non-state carriers still standing, from about 10 four years ago: Jio, Bharti Airtel and Vodafone Idea.Bruised by Jio, which rolled out its network aggressively to acquire more than 300 million customers within three years, billionaire Sunil Mittal’s Bharti Airtel has run up a net debt of about $16 billion, while shoring up profits with one-time gains for at least four quarters in a row.Vodafone Idea, India’s largest carrier by users after Vodafone Group Plc’s local unit merged with tycoon Kumar Mangalam Birla’s Idea Cellular Ltd., has reported losses in every quarter since the deal was announced in 2017. Both Bharti Airtel and Vodafone Idea top the list of Asian peers with highest borrowings, according to data compiled by Bloomberg.However, unlisted Jio thrived, supported by the deep pockets of Ambani’s energy-to-retail conglomerate that has spent more than $36 billion to build the telecom unit. But the group’s net debt of almost $28 billion is also backed by cash and equivalents of $11.3 billion. In January, Ambani, said in a speech that his network is “fully 5G ready,” signaling spending will be relatively less.Globally, 5G spectrum auctions have witnessed “robust” participation, said Ernst & Young’s Singhal. Germany raised 6.55 billion euros ($7.3 billion) this month, more than the government’s highest estimate of 5 billion euros, while Italy got $7.6 billion last year, more than twice what authorities expected. If that trend is any indication, India’s auction may well turn out to be a success.“The prognosis for 5G in India is positive given the growing appetite for data, increasing digital transformation and the need to quickly adopt new technologies,” said Singhal. “It has the potential to transform lives and play a key role in socio-economic development.”\--With assistance from Santosh Kumar and Dave McCombs.To contact the reporter on this story: P R Sanjai in Mumbai at email@example.comTo contact the editors responsible for this story: Sam Nagarajan at firstname.lastname@example.org, Bhuma ShrivastavaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.