Telecos' balance sheets in danger zone

Very soon most telecom companies may be knocking on the doors of banks to borrow against their licences and other assets - a move that will strain their already leveraged balance sheets and impact cash flow. And if they fail to push up their earnings through value added services (VAS) in the years to come, Telecom Regulatory Authority of India ( Trai) latest proposals on auction pricing of telecom 2G spectrum could pave the way for losses, consolidation, and shift in investor preference. 

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