Spectrum costs will drive up debt for some Asia-Pacific telcos: Moody’s

Telcos in Asia’s emerging markets will face higher spectrum liabilities, but these essential costs are not subject to refinancing and have limited immediate impact on cash flows and liquidity, Moody’s Investors Service said on Monday.

The ratings of Asia-Pacific (APAC) telecom companies in emerging markets can tolerate the increased deferred spectrum liabilities at current levels, if these essential costs are the main driver of high debt or weaker leverage, Moody’s Investors Service said in a new report.

For emerging markets — China, India, Indonesia, Malaysia and Philippines — spectrum liabilities to gross debt will increase to more than 16 per cent in 2021 and 2022, from 11.6 per cent in 2020 and 9.3 per cent in 2018, assuming India completes its 5G spectrum auction in 2022, it added.