Government may revise base price for 700MHz

At Rs11,485 crore for 1 MHz, the 700MHz band was the most expensive on offer at the auction which ended on Thursday


Most analysts had expected telcos to avoid bidding for the band, given the steep price, the financial strain on the debt-ridden telecom industry and more intense competition following the entry of Reliance Jio Infocomm Ltd. Photo: Mint
Most analysts had expected telcos to avoid bidding for the band, given the steep price, the financial strain on the debt-ridden telecom industry and more intense competition following the entry of Reliance Jio Infocomm Ltd. Photo: Mint

New Delhi: After a tepid response to the latest spectrum auction, billed as India’s largest sale of radio waves, the government on Friday said that it will look at revising the base price for the efficient but expensive 700 megahertz (MHz) frequency, which went unsold.

At Rs11,485 crore for 1 MHz, the 700MHz band was the most expensive on offer at the auction which ended on Thursday. At that price, it made a bidder liable to pay Rs57,425 crore for 5MHz on a pan-India basis, and had the potential to fetch bids worth over Rs4 trillion.

Most analysts had expected telcos to avoid bidding for the band, given the steep price, the financial strain on the debt-ridden telecom industry and more intense competition following the entry last month of Reliance Jio Infocomm Ltd.

Telecom minister Manoj Sinha said the government will decide on a revision of the pricing of spectrum in the 700 MHz band “at the right time”.

“The revision of prices will happen as per pricing mechanism... This applies to 700 MHz primarily and other bands where bids didn’t come in,” Sinha said.

Lower frequencies are better at passing through walls and travelling longer distances, allowing carriers to set up fewer cell towers and save on costs.

Bharti Airtel Ltd chairman Sunil Mittal said on Friday that the fact that the 700 MHz band, which he described as truly high-quality spectrum, went unsold was a “missed opportunity”.

Mittal said three or four networks in the 700 MHz band would have vastly improved the rural broadband network.

“I think it’s a missed opportunity and I hope the government will look into it,” Mittal said.

“Nearly Rs60,000 crore for a tiny 5 MHz, it was bound to get no response,” Mittal said in response to a question at the India Economic Summit organized by the World Economic Forum.

The spectrum auction ended five days after it started, with the government raising Rs65,789.12 crore in revenue, of which less than half will accrue to the exchequer in the current fiscal year.

The money is just a fraction of the Rs5.63 trillion (at base price) of spectrum put up for sale in the auction of 2,354.55MHz in radio waves. The government sold 41%, around 965 MHz.

Vodafone India Ltd was the most aggressive buyer, forking out Rs20,280 crore for 283 MHz spectrum. Reliance Jio purchased 214 MHz, of which 75% is in the 2,300 MHz band (10 MHz each in 16 circles), spending Rs13,672 crore.

Airtel acquired close to 175 MHz of spectrum, of which three-quarters was in the 2,300 MHz band (10 MHz across 13 circles), at a cost of Rs14,244 crore. Idea Cellular Ltd acquired 275 MHz, of which 200 MHz was spread across 2,300 MHz and 2,500 MHz, for Rs12,798 crore.

Airtel remains at the top in terms of spectrum holding, with 945.3 MHz, followed by Reliance Jio with 920.20 MHz.

Participation in the auction was muted partly because, compared with previous editions, the telcos did not face any risk of spectrum expiry this time and focused largely on filling gaps in their holdings of radio waves, primarily for data services. The fact that auctions are a regular industry feature gives telcos the flexibility to wait for the next round.

Both Mittal and Sinha predicted a significant improvement in the quality of service offered.

“I personally believe that you will see tremendous amount of upliftment of speeds. My own company has picked up a second carrier in most of the key places that not only just doubles your broadband speed but gives you probably 5x or 6x of speeds coming through,” Mittal said.

According to Sinha, Indian consumers will get a respite from dropped calls. “The controversy around call drop in the entire country will be resolved post this auction and none of it will happen due to lack of spectrum,” he added.

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