The proposed auction of 5G airwaves by April will likely see muted participation from India’s bleeding telecom operators who have little money left for expensive spectrum, and even less to build the infrastructure needed for a rapid roll-out.

Demand for 5G spectrum will also be restricted because of limited use of even faster internet by consumers and the undeveloped ecosystem around the next generation wireless technology.

Given the current uncertainty in the telecom sector, after the Supreme Court ruling on adjusted gross revenue (AGR) definition, operators would have little appetite for spectrum, analysts said.

“At this stage, when the balance sheets of the telcos are saddled with elevated debt levels, a sizeable participation in the forthcoming spectrum auctions seems unlikely. The telcos are likely to go for renewal of the expiries due in 2021," said Ankit Jain, assistant vice-president of corporate ratings at Icra Ltd.

The Digital Communications Commission, the highest decision-making authority at the department of telecommunications (DoT), last week accepted the prices suggested by the Telecom Regulatory Authority of India, or Trai, for spectrum auctions in March-April.

The government plans to put 8,300 megahertz of spectrum at a reserve price of 5.23 trillion under the hammer, out of which 6,050MHz are allocated for 5G services. This will boost data speeds and propel the Internet of Things, with the potential to bring radical changes in agriculture, manufacturing, healthcare and education.

The DoT has set a base price for 3,300-3,600MHz band, expected to be the primary band for 5G services, at 492 crore per megahertz. In South Korea, the same band was priced at around 131 crore per megahertz in auctions held in June 2018.

Bharti Airtel has termed these prices exorbitant, while Jio had in October urged the Centre to take a “holistic look at promoting 5G technology with policy measures including optimal pricing of 5G spectrum".

“It was not surprising that the government did not reduce reserve prices. But if telcos don’t bid for 5G this time, then in the next auction, the regulator will automatically bring down base prices making it more affordable," a top official at a telecom gear maker said, requesting anonymity.

In fact, this time the base price of 700MHz band has been fixed at 6,568 crore per megahertz—43% below the 11,485 crore set in the FY17 auction when no telecom operator had bid for this band.

The Cellular Operators Association of India believes the prices of 5G airwaves are 4-6 times higher than that of similar spectrum sold recently in several countries. Apart from this, even the quantity on offer is not enough.

“The quantum of spectrum in the 5G band being put up for auction will be only 175MHz, woefully inadequate for operators to roll out robust 5G networks and services," said Rajan S. Mathews, director general at COAI.

The industry body has also urged the government to open up more bands for 5G services.

“We request an early referral from DoT to Trai to make a recommendation for including the 26GHz band for the planned spectrum auction in conjunction with other bands as this is imperative and will have a significant bearing on realizing the deployment of 5G in India," Mathews said.

The government has also announced its intention to focus on three big social sectors for deployment of 5G—education, agriculture and health-care. However, building use-cases in these sectors is still a work in progress.

“India first needs to build use-cases of 5G specific to the country’s needs. The government’s clear focus is to deploy 5G for the masses. Plus, globally too, except in South Korea and China, use-cases are still under development," a senior DoT official said, requesting anonymity.

In FY17, the Centre had raised 65,789 crore through spectrum sale, a fraction of the 5.63 trillion worth of spectrum at base price it had put up for sale. While the total spectrum put up for sale was 2,354.44MHz across seven bands, the government managed to sell just 965MHz.

The government did not auction any spectrum in FY18 and FY19.

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