Intense bidding is expected at India's telecom spectrum auction that begins on 4 March.
While existing majors are seen as having weaker pricing power, Reliance Jio's entry is poised to make the auction highly competitive.
According to Fitch Ratings, telcos are likely to commit at least $13bn (£8.47bn, €11.64bn) in the auctions - over 75% of which is likely to be contributed by the top-four telcos.
"Most telcos' net debt will rise to fund spectrum payments while competition limits their ability to raise tariffs, particularly with the impending entry of a new competitor, Reliance Jio," Fitch said in a note.
The top-three telcos - Bharti Airtel, Vodafone India and Idea Cellular - could commit around $2.5bn-4.5bn each to renew their expiring spectrum in six, seven and nine regions, respectively, the rating agency said.
They are also likely to acquire additional spectrum to support fast-growing data services.
Idea is most exposed to the auctions as it needs to retain its expiring spectrum in circles which contribute around 70% of its annual revenue. Such revenue contributes 45% and 35% of annual Indian revenue for Vodafone and Bharti, respectively, Fitch said.
Telcos whose 900MHz spectrum is expiring will prefer to retain this bandwidth, as having to switch frequencies could require significant capex and disruption of the already-established network.
Reliance Communications will be the least affected as it is likely to commit a maximum of $667m in seven circles, where the competition for spectrum will be lower, Fitch said.
Reliance Jio, a subsidiary of Reliance Industries, which plans to roll out its services in 2015 with an investment budget of $12bn, is likely to fill its spectrum gaps in the 1,800MHz band.
"However, as occasionally seen in the earlier auctions, Reliance Jio could also push up the spectrum price in 900MHz for other telcos, if it chooses to do so, as the auction mechanism hides the identities of participants," the Fitch note showed.
The rating agency said the 900MHz auction price could rise at least 20% higher than the reserve price.
There are eight telecom service providers participating in the auction: Reliance Communications, Reliance Jio, Bharti Airtel, Vodafone India, Tata Teleservices, Uninor, Idea Cellular and Aircel.
These eight companies have submitted an earnest money of Rs 204.35bn ($3.3bn). The Kolkata-based mjunction services, an information technology company, will conduct the auction for the Department of Telecom.