The Department of Telecommunications (DoT) may ask the sector regulator to reduce the spectrum prices it proposed for the next auction, keeping in mind the health of an industry grappling with more than Rs 7 lakh crore of debt.
A DoT panel, set up to consider the Telecom Regulatory Authority of India’s (Trai) recommendations on spectrum pricing and timelines, is of the view that the auctions should not be conducted before late 2019 because the poor financial health of the industry.
If any spectrum needs to be put on the block earlier, it could be just the 5G band, given the government’s aim of rolling out the new technology in 2020 along with other major countries, senior DoT officials told ET, but asked not to be named. The panel may also seek a reduction in the lock-in period before which 5G spectrum buyers cannot trade the airwaves.
"The expert committee is mostly of the view that the telecom regulator needs to revise the spectrum prices," said one of the officials.
The industry does not have the strength to pay for more spectrum yet, he said. But there could be a piecemeal approach whereby the 5G band could be put on the block first, so that the technology can be rolled out by 2020 as per the government's vision, followed by the rest of the airwaves.
The recommendations of this expert panel will be presented to the Telecom Commission, which is the highest decision-making body in the DoT. The commission then is likely to send a reference back to Trai for revisions.
This August, Trai had recommended the auction of airwaves across the 4G bands of 700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2100 MHz, 2300 MHz and 2500 MHz, besides 5G spectrum in the 3300-3600 MHz bands. These will be offered to Vodafone Idea, Bharti Airtel and Reliance Jio Infocomm, the three non-state telecom operators.
Trai had lowered the starting prices for most bands from those set at the previous sale in October 2016. Specifically, the regulator had slashed the base price of the premium 700 MHz band by 43% <<to RsRs 6,568 crore a unit, or Rs 32,840 crore for a block of 5 MHz.>> and set Rs 492 crore per unit as the minimum rate for the next-generation 5G spectrum. But the industry had said this was still not affordable given the pressures on revenue and profitability, and the weight of the over Rs 7 lakh crore of debt.
Industry experts said Trai’s suggested base price of ?492 crore per unit of 3500 MHz 5G spectrum was much higher than the ?65 crore per unit discovered at a recent 5G auction in Korea.
The regulator had also advised against any delay in selling spectrum.
In a meeting held last week, the DoT committee recommended that the lock in periods should be deliberated on by the regulator again.
Trai had proposed a five-year lock-in for the 5G band — compared with the two years for other bands — before buyers could trade spectrum they bought through auction. DoT officials think this lock-in time should be reduced, with one section of the view that it could be back to two years, an official said.
The committee, however, agrees with the regulator's recommendations that there should not be any rollout obligations for winners of 5G airwaves, said another Dot official.
The next auction could generate Rs 5,06,110 crore for the government, or more than seven-and-a-half times the Rs 65,789 crore raised in October 2016, if all of the over 8,500 MHz of airwaves are sold at the base price.