NEW DELHI: The government is unlikely to hold the spectrum auction this fiscal year as the financially stressed sector will take some more time to stabilise fully and an early sale could affect demand for airwaves, including the prized 5G.
“We need to give some time to the telcos after announcing the auction prices. Right now, who has the money to pay? Let the industry stabilise…we will most likely have the auctions next fiscal,” said an official who did not wish to be identified.
The deferment will be relief to the sector which sought that the auctions to be held late 2019 on account of the financial stress exacerbated by debt of nearly Rs 8 lakh crore. A little over a week back, the Telecom Regulatory Authority of India (Trai) recommended the starting prices for spectrum in the 4G bands of 700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2100 MHz, 2300 MHz and 2500 MHz, besides 5G airwaves in the 3300-3600 MHz bands.
Trai suggested that at least 8600 MHz of airwaves be offered to Bharti Airtel, Reliance Jio Infocomm and the Vodafone India-Idea Cellular, estimated to fetch over Rs 5 lakh crore, if all bandwidth is sold at base price. The regulator, though, left the timing of the sale to the Department of Telecommunications (DoT) in a nod to the financial stress in the sector but also said the auction should not be delayed.
The DoT will now take a final decision on the pricing and timing before sending it to the Union cabinet for approval.
Industry watchers say the department would want to avoid a situation where airwaves, especially the 5G ones as well as the ones in the premium 700 Mhz band — whose starting price was cut 43% from the last sale — go unsold once again. That would mean a major embarrassment for the government which has been very vocal about its intent to introduce 5G in tandem with the rest of the world.
The DoT had managed to sell just 41% of all the airwaves on offer in the October 2016 auction, fetching nearly Rs 66,000 crore out of the over Rs 5 lakh crore worth of airwaves on sale.
The communication ministry would need to factor in the views of the finance ministry which needs funds to meet its fiscal deficit target of 3.3% for FY18-19 and for social sector spending in the run-up to the general elections in 2019.
The government has budgeted in FY19 revenue from the sector at Rs 48,661.42 crore, a 58% rise from the year ago, but far lower than the Rs 78,715 crore it received in FY16-17 with the October 2016 bandwidth sales.
“We think that the auction should take place in the second half of 2019, and even then, these rates are going to be expensive,” said Rajan Mathews, director general of industry body Cellular Operators Association of India.
Trai has pegged the base price of 5G airwaves at Rs 492 crore per unit, or Rs 9,840 crore for pan-India airwaves and suggested the band “should be put to auction in the block size of 20 MHz.” For 700 MHz, the authority proposed cutting the base price to Rs 6,568 crore a unit, or Rs 32,840 crore for a block of 5 MHz.
“Besides the cost of acquiring spectrum, the rollout of networks is also burdensome for the debt weary industry. 5G is still settling down as specifications and the ecosystem could take until 2020 to settle down, when it might be more appropriate,” said industry veteran Sandip Das, now a senior adviser at consultancy firm Analysys Mason.