The Union Cabinet may take a call this week regarding the pricing of spectrum for the 5G auction. Official sources told FE that the Digital Communications Commission (DCC) has endorsed the reserve price proposed by the Telecom Regulatory Authority of India (TRAI) and suggested that the Cabinet take a final decision on whether to reduce the price.
The cabinet will also decide whether the spectrum needs to be auctioned for 20 years or 30 years; Last year, wind waves were auctioned off for 30 years.
As TRAI’s proposed price for 30 years is 1.5 times higher than in 20 years, the government is considering both options so that telecom operators can make decisions based on their financial position.
If the Cabinet makes a final decision this week, the Department of Telecommunications (DoT) will immediately go down to work on the Notice of Invitational Application (NIA) and publish it by May 25. This document is very important because it contains all the official guidelines Related to the auction process.
Once the NIA is finalized and released, it usually takes 54 days for the auction to begin. “We are in the process of conducting the auction in July and commercial services may be launched in August,” a DoT source said.
The auction is expected to end in a few days as there are only 2-3 operators and most of the spectrum is likely to be sold at the reserve price.
“Adequate spectrum is available and players are scarce, so intense bidding is not going to happen. Telcos will buy according to their needs, ”said one analyst. Last year, the spectrum auction ended in two days.
Once the sales process is complete, DoT will try to allocate frequencies to telecom operators as soon as possible, so that a commercial rollout occurs as soon as possible. The DoT is aiming to launch the commercial 5G services desired by the Prime Minister’s Office (PMO) on August 15.
As previously reported, TRAI has reduced the reserve price of 5G spectrum at 3,300-3,670 MHz by 36% to $ 317 crore per MHz in its recommendation. In 2018, when TRAI first recommended a reserve price for this band, it set it at Rs 492 crore per MHz. Telecom operators, who demanded a 90-95% reduction in the reserve price, still feel that it is on the rise.
Since operators will need around 100 MHz to run an efficient Pan-India network, they will have to spend Rs 31,700 crore to buy this band.
For the millimeter band (24.25-28.5 GHz), Trai has recommended a reserve price of Rs 6.99 crore per MHz. Operators will need a minimum of 800 MHz for a Pan-India network here and will have to spend Rs 5,592 crore. So, in total, they will have to spend around Rs 37,292 crore to buy the two bands.
These prices are for a period of 20 years, which will increase 1.5 times for a period of 30 years, so in the latter case, the operators will have to pay a total of Rs 55,938 crore for the two 5G bands.