With the new norms that allow telecom operators to sell spectrum, the industry could see emergence of four pan-India players -- Bharti Airtel, Vodafone India, Idea Cellular and Reliance Jio Infocomm -- while others may exit, according to India Ratings and Research (Ind-Ra).
The agency expects Aircel, Reliance Communications and Tata Teleservices to head to the exit door.
"Aircel may consider exit in Gujarat, Haryana, Kerala and Madhya Pradesh. Reliance Communications may look to monetise its under-utilised spectrum in Jammu and Kashmir, the North-East, and similarly, Tata Teleservices may evaluate exit options for Himachal Pradesh and Rajasthan," Ind-Ra said.
The government received the highest bid of over Rs 1.1 lakh crore in spectrum auction held in March. Idea Cellular made a bid worth Rs 30,307 crore to purchase spectrum.
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Fitch Ratings is of the view that the top three telecom operators -- Bharti Airtel, Vodafone and Idea Cellular -- may further consolidate their market share by acquiring additional spectrum from smaller telcos, decongest their network, and support their fast-growing 3G/4G services.
"Smaller telcos -- including Tata Telecom, Videocon Telecom and Aircel -- suffer operating losses, are struggling to gain market share, and are saddled with high debt. These businesses could trade their under-utilised spectrum assets with larger telcos in loss-making Indian circles to focus only on profitable ones," Fitch said.
Reacting to Fitch observations, Videocon Telecommunications Director and CEO Arvind Bali said: "I think it's too early for anyone to comment on our financial and business health. We are a long-term and serious player, and we are here to stay."