Bharti Airtel, Vodafone India and Idea Cellular, which are already facing pressure due to the entry of Reliance Jio, may spend around Rs 80,000 crore in network capital expenditure (Capex) over the next 2 years, which is 25% higher than the aggregate network capex in the previous two fiscals, CRISIL Research said.

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“This has come at a time when profitability and operational cash flows are expected to come under pressure with the launch of Reliance Jio’s services,” CRISIL’s Director Ajay Srinivasan said

Srinivasan added that these developments will increase incumbents’ reliance on external funding. Vodafone Plc recently decided to invest Rs 47,700 crore in its Indian arm to reduce debt and increase investment wherewithal.

Moreover, the spectrum auction has consolidated the competitive position of Bharti Airtel, Vodafone India and Idea Cellular. However, Reliance Jio, which has also fortified its spectrum holdings at this auction, will pose stiff competition for incumbents.

Bharti Airtel, Vodafone, Idea Cellular and Reliance Jio cumulatively account for over 90% of the aggregate spends at the auction, which witnessed moderate participation with operators eventually acquiring 41% of the over 2,350 MHZ of spectrum on offer.

“Operators clearly intended to ramp up their 4G and 3G spectrum holdings at minimal upfront cost, given the significant debt overhang (industry debt approximately Rs 4 lakh crore as of March 2016). Unlike the previous auction, there was no business compulsion to acquire spectrum this time,” Prasad Koparkar, Senior Director, CRISIL Research, said in a statement.