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> But the more a company pays for spectrum, the lower its profits and the less it has left to invest in new infrastructure. Strange argument. Does india not ha
by amadeuspagel 6y ago
> But the more a company pays for spectrum, the lower its profits and the less it has left to invest in new infrastructure.
Strange argument. Does india not have banks? A bond market? If that new infrastructure is going to pay for itself, it should be possible for companies to raise money to build it. The government shouldn't have to give resources away, so that companies have more money for investments.
- robocat 6y agoThe very next sentence after your quote is “In India, high fees have led to high levels of debt” which somewhat answers why more debt might not be the answer.
- amadeuspagel 6y agoNo it doesn't. So it has led to high levels debt. So what? What's the problem with debt?
- fakedang 6y agoFirst of all, debt in emerging markets is not the same as debt in the West. A company cannot endlessly take debt, even if it continues making losses, simply because in such a situation, the government often intervenes - with a heavy hand. Look at guys on the run such as Vijay Mallya or Nirav Modi, former tycoons who ended up mired in debt, and who are currently wanted by the government. Another tycoon, Anil Ambani, is only able to stay back in India and fight out a case in court, after being bailed out by his ultra-rich brother's wealth and ties to the government.
- blueblisters 6y agoIt's very hard to forecast revenues from emerging markets - bondholders likely won't be able to stomach the risk of large infrastructure investments without any idea if/when they can breakeven.
- amadeuspagel 6y agoIt's their job to figure out what risks to take, how much interest to charge, how to hedge.