NEW DELHI: The high base price of 5G spectrum will invite a weak participation from telecom operators in the upcoming 5G spectrum auctions, said telecom experts on Wednesday. The high base price of spectrum, recommended by the Telecom Regulator of India (Trai), will impact the debt-laden telco like Vodafone Idea, which will find difficulty in participating in the auction process.
“Vodafone Idea is yet to attract noteworthy fundraising and it is continuously losing subscribers to Airtel and Jio. This may result in muted bidding intensity from the operator and the auction process may become a playing field for only two operators,” said Charu Paliwal, Research Analyst at Counterpoint Research.
Ankit Jain, Assistant Vice President and Sector Head of Corporate Ratings, ICRA Limited said even at a modest participation, the debt levels of the telecom industry are likely to elevate further to Rs 4.8 lakh crore by March 2023.
“The reserve prices have been materially revised downwards by around 35-40% from the last spectrum auction and despite this, the total spectrum on offer at reserve price is valued at around Rs 5.0 lakh crore for 20 years. We expect a weak participation in these auctions and even at a modest participation, the debt levels of the industry are likely to elevate further to Rs 4.8 lakh crore by March 2023,” said Jain.
Trai has recently launched its recommendation paper in which it recommended cutting the base rate of 3.3-3.67 GHz airwaves to Rs 317 crore a unit, from Rs 492 crore a unit. It has also reduced the price of the 700 MHz band to Rs 3,927 crore, after failing to bid out in the past two sales due to the high price. However, the telecom industry wants the base price reduced by 90% in order for better services.
Peeyush Vaish, Partner and Telecom Leader at Deloitte India is of the view that a further price reduction of the spectrum may spur Indian telecom operators towards aggressive bidding and also help the Government monetize the unsold spectrum. “In order to make 5G services more affordable across the country, the basic price cut was well warranted,” said Vaish.