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5G spectrum auction slated for Mar-Apr; DoT panel rules against reserve price cut

The DCC, which is the top decision-making body of the Department of Telecommunications (DoT), said that upcoming auctions will be held between March and April next year, and will also offer for auction airwaves for 5G telephony services.

By: ENS Economic Bureau | New Delhi |
Updated: December 21, 2019 6:11:50 am
Of the three biggest telecom players in the country, both Sunil Bharti Mittal-led Bharti Airtel and Mukesh Ambani-led Reliance Jio Infocomm have expressed their reservations about the high prices of 5G spectrum. (Representational image)

The Digital Communications Commission (DCC) on Friday decided to accept all the recommendations made by the Telecom Regulatory Authority of India (Trai) on spectrum auctions, including on keeping the reserve prices for the sale of 8,300 mega hertz (MHz) spectrum at Rs 5.22 lakh crore.

The DCC, which is the top decision-making body of the Department of Telecommunications (DoT), said that upcoming auctions will be held between March and April next year, and will also offer for auction airwaves for 5G telephony services.

Explained

Govt hopes telcos will bid, even as AGR dues remain

The timing of the 8300 MHz spectrum auction could spark yet another debate as the incumbent telecom companies have raised concerns on their inability to participate in them. Of the three big telecom companies, Bharti Airtel and Vodafone Idea have to come up with Rs 43,000 crore and Rs 54,000 crore , respectively, within a month. The government has maintained that it expects participation from all players.

“The DCC has approved the Trai recommendations including that of not reducing prices. Trai has given detailed reasons, so DCC thought it fit to accept that,” Telecom Secretary Anshu Prakash said. A Cabinet note for the approval of spectrum auction will be floated next month for getting approval from the Cabinet Committee on Economic Affairs.

The approval by DCC comes nearly two months after Union Telecom Minister Ravi Shankar Prasad had, while inaugurating the India Mobile Congress, assured industry leaders that the Central government was considering “pricing reforms in the sector”, hinting at the reserve price for spectrum auction.

Of the three biggest telecom players in the country, both Sunil Bharti Mittal-led Bharti Airtel and Mukesh Ambani-led Reliance Jio Infocomm have expressed their reservations about the high prices of 5G spectrum. While Bharti Airtel had said that the prices were too exorbitant, and they would not be able to participate in it, its rival Reliance Jio said that the government should look at optimal pricing of the 5G spectrum.

Vodafone Idea chairman Kumar Mangalam Birla also had, in October, said that the telecom company sought an enabling regulatory environment so that it could make the necessary investments. India’s telecom sector — which is now largely a three way fight between Bharti Airtel, Jio, and Vodafone Idea — has been reeling under debt and low average revenue per user, triggered by a tariff war started by Jio.

The Supreme Court judgment on adjusted gross revenue (AGR) dues put Bharti Airtel and Vodafone Idea under further pressure, as they have to come up with Rs 43,000 crore and Rs 54,000 crore, respectively, within a month. The pressure on telecom players notwithstanding, the government hopes that the companies will participate in the 5G as the “telecom operators do require spectrum”. “I think we should be able to sell. Their services are expanding, their networks are expanding. There should be good competition in bidding for this. I will wait and watch” the Telecom Secretary said.

For the spectrum auction of more than 8,300 MHz spread across all 22 licensed spectrum access (LSA) or telecom circles, successful bidders will have to pay upfront 25 per cent of the total amount upfront for sub-1,000 MHz, and 50 per cent upfront for all frequency bands above 1,000 MHz. Bidders, however, will have some relief in payment for the auctions this time around. It has also been decided that bidders will only have to pay the entire cost of spectrum only for the band which is being vacated within a month of bidding.

If the spectrum is not vacant, the bidder will have to pay 10 per cent for sub-1,000 MHz frequency, and only 20 per cent for above 1 Giga Hertz frequency band range, the Telecom Secretary said, adding that the rest of the amount will have to be paid one month before the spectrum is vacated.

Meanwhile, in a meeting with Finance Minister Nirmala Sitharaman, industry body Cellular Operators’ Association of India (COAI) raised the issue of adjusted gross revenue and sought cut in levies like licence fee and spectrum usage charges.

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