India plans to hold an auction in January for third-generation spectrum, which will allow high-speed Internet and video downloads on mobile phones.
But analysts say it will take time for companies to earn back the money spent on the licenses and that the auction will add to their balance-sheet burdens.
Experts say the sector can only reasonably support four to five players and that consolidation looms.
“These developments will accelerate industry consolidation over the next 18 to 24 months,” said Satish Seth, group managing director of Reliance Communications, adding that Reliance would be a survivor.
A shakeout will ultimately be beneficial for the industry as it would allow those who emerge on top to restore pricing, analysts say.
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