BackTelcos may buy 5G suitable spectrum, but price a concern
The auction is expected to fetch ₹55,000– 60,000 crore to the exchequer, says ICRA
PremiumTelecom operators can, in the next auction scheduled in March, buy spectrum in bands that can be used for 5G service, though the radio airwaves being put up for sale are ideally suited to 4G technology, analysts said.
Adding 5G-capable spectrum to their shopping cart may be an attractive idea for telcos, but the reserve price fixed for the sale could be a deterrent, they cautioned.
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The cabinet on Wednesday approved the auction of spectrum in the 700 megahertz (MHz), 800MHz, 900MHz, 1,800MHz, 2,100MHz, 2,300MHz, and 2,500MHz bands but not those of the 3,300-3,600MHz bands that have been earmarked by the Telecom Regulatory Authority of India (Trai) for 5G.
Telcos can buy spectrum in the available bands that could later be used for rolling out 5G services by upgrading their networks and equipment, said analysts. The 3,300-3,600 MHz bands are among the most preferred spectrum bands for 5G globally as the fastest 5G speeds can be achieved on higher bands. However, there is precedence in other markets of using lower bands for 5G. In Europe, the 700 MHz band has been prioritized for wide area 5G deployment, while in the US, the 600 MHz band has been licenced for 5G deployment.
The department of telecommunications (DoT) will sell 2,251 MHz of spectrum at a base price of ₹3.92 trillion, which could discourage participation by telcos. Some analysts said that the next auction could be a repeat of the October 2016 fiasco because of the lack of interest in two of the three largest private telcos, Bharti Airtel Ltd and Vodafone Idea Ltd (Vi).
“We expect moderate participation in the upcoming spectrum auctions, largely limited to renewal of expiries, primarily in 800MHz and 1,800MHz bands... The auction is expected to fetch ₹55,000– 60,000 crore to the exchequer," said Ankit Jain, assistant vice president, ICRA. Four years ago, the government had raised just ₹65,789 crore through spectrum auction, a fraction of the airwaves worth ₹5.63 trillion put up for sale.
The next auction is crucial for Reliance Jio Infocomm Ltd as its right to use a major chunk of spectrum in the 800MHz band expires next year.
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