Kicking off the process of spectrum auction, which would include airwaves ideal for 5G mobile telephony, the Telecom Regulatory Authority of India (Trai) issued a consultation paper seeking stakeholders’ views for selling the natural resource across nine frequencies.
While Department of Telecommunications (DoT) has proposed holding the auction this year, Trai has sought views on when the next round of auction should be held and if the airwaves should be put on the block in a “phased manner”, considering the financial stress on mobile companies. A section of the industry, though, is of the view that auctions should be held in the latter part of 2018 or early 2019.
“If the spectrum auction is held now, should the entire spectrum be put to auction or should it be done in phased manner i.e. auction for some of the bands be held now and for other bands later based on development of eco system etc?” Trai asked. It has sought comments by September 25, and counter-comments by October 3, following which it would send its recommendations to the DoT.
Cellular Operators Association of India’s director-general Rajan Mathews said that since the industry was in the midst of consolidation, the sector would gain appetite for more airwaves by end of next year, or early 2019. “When two large companies go ahead and merge, there would be a level of harmonisation, and spectrum surrendering that would happen, and only after that the government should conduct the auction. It would be premature for these companies to go and buy spectrum given the ongoing consolidation,” Mathews said. On being asked if the auctions should be conducted in a phased manner, Mathews said that the government should go ahead and put up all that it has for auction, and let the market forces determine how much is needed.
Trai also pointed out that the industry was undergoing consolidation with service providers having filed for merger of their companies or licences, with some firms even trading their entire spectrum holding to close their services. “DoT…has indicated that about Rs 3.08 lakh crore is due over the next 11 years on account of deferred payment plans opted by telcos…,” Trai said. Noting DoT’s views that the telecom industry owes about Rs 4.60 lakh crore to various financial institutions and banks, Trai said that “due to hyper competition, concerns have been expressed about the financial health of the sector, revenue growth and the capability of the companies to meet their contractual commitments”.
During the last auctions, which were conducted in October 2016, the highest priced frequency – 700 MHz – considered most ideal for deployment of 4G services, did not attract a single bid due to its high price. Considering the market’s response to such high-valued bands, Trai has also sought industry’s comments on whether the valuation of should be derived by relating it to value of other bands by using technical efficiency factor.