NEW DELHI: The Digital Communications Commission, the apex decision making body for the telecom sector, is set to meet next week to take up and finalise the reserve prices for the upcoming 4G and 5G spectrum auctions. While the industry has been demanding a reduction in the reserve prices recommended by the Telecom Regulatory Authority of India (TRAI), sources say that the telecom watchdog has refused to budge on the issue.
“It is likely that the proposed prices will get approved because the regulator has refused to reconsider their recommendation in this area,” a Department of Telecom official said. This will be the first auction of 5G spectrum in India and the industry, struggling with Reliance Jio-led disruption and high debt levels, have termed TRAI’s prices as “too high”. The regulator has stood by its recommended pan-Indian base price of Rs 492 crore per MHz for 5G radio waves in the 3,300-3,600 MHz 5G band, with spectrum to be sold in block sizes of 20 Mhz each.
It has also capped 5G spectrum per bidder at 100 Mhz each to prevent monopolisation. “In the present financial distress, it is not very likely major operators will have the bandwidth to start investing in 5G spectrum at the current prices,” noted Rajan Mathews, president of industry lobby Cellular Operators Association of India (COAI).
Sources say both Bharti Airtel and Vodafone Idea may give the 5G bands a miss this auction, if the recommended reserve prices are made official. Both operators are sinking significant funds into enhancing their 4G networks, even as profitability has eluded them. Bharti Airtel posted a consolidated net loss of around Rs 2,866 crore and Vodafone Idea a whopping Rs 4,900 crore net loss during the first quarter of the year.
“(5G spectrum) is also not an immediate requirement, because the 5G ecosystem will take years to develop… It makes sense to wait, since at the moment, these investments will have to be funded by borrowings, which will require servicing immediately. But, companies are unlikely to see any returns from this band for a few years,” said a senior industry executive.
The government intends to conduct the auction by early next year, according to communications minister Ravi Shankar Prasad. At the recommended base prices, the spectrum going under the hammer will be worth Rs 5.76 lakh crore.