Trai recommends the sale of airwaves of over Rs 5 trn for 5G auction
If it happens, this would mean the largest spectrum auction in terms of the amount with over 7,000 Mhz going up for sale across eight bands
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Signaling a quantum leap in mobile technology, the Telecom Regulatory Authority of India (Trai) on Wednesday gave its recommendations for the auction of eight bands, including the fifth generation (5G) ultra high-speed telephony. A 5G auction, a first for India, is expected to be a catalyst for the internet of things (IoT) innovations that would speed up machine learning and artificial intelligence. Airwaves worth around Rs 5.06 trillion will be on offer for telecom operators in the next round of auction.
If accepted and implemented by the government, this would mean the largest spectrum auction in terms of the amount with over 7,000 Mhz going up for sale across eight bands. This would range from the premium 700 Mhz to 3,300-3,600 Mhz. In terms of value, the previous auction in 2016 was at a slightly higher level with airwaves amounting to Rs 5.63 trillion up on sale. The cost of 700 Mhz airwaves alone was Rs 4 trillion. However, the government could sell airwaves worth around Rs 657 billion only, as telcos decided to ignore the high-end 700 MHz band completely.
The timing of the auction will be decided by the Department of Telecommunications (DoT) after gauging the interest of the industry, which is already divided on the subject of the 5G auction. The telecom industry has been in the midst of financial stress, resulting in significant consolidation in the sector. Despite their falling revenues and profitability, several telcos are already getting into partnerships for 5G pilot runs to enable a smooth rollout in sync with global players. The NDA government too has been upbeat about 5G, expecting its Digital India campaign to get a boost.
In the last auction, around 60 percent spectrum remained unsold. Also, much of the airwave acquired by telecom operators at that point is yet to be deployed.
In what is being seen as a relief to the industry, Trai has suggested that the reserve price of the 700 MHz band should be double that of the 1,800 MHz spectrum band. This translates into a reserve price of Rs 65.68 billion per Mhz for the 700 MHz band, about 42 percent lower than the last auction in 2016 when the pan-Indian reserve price of the band was Rs 114.85 billion. In another step to ease the industry pain, the regulator has recommended a price reduction in circles where spectrum remained unsold in the 2016 auction.
As for the 1,800 MHz band, the regulator has proposed a base price of Rs 32.85 billion on pan Indian basis.
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