The much-awaited spectrum auction will finally happen in the second half of 2019 — soon after the new government takes over at the Centre.
According to the 100-day agenda of the Department of Telecom (DoT), consultation on the issue will start as early as June before a note is finalised for cabinet approval.
Spectrum auctions have remained suspended for some time now and fresh bidding will take place after a gap of two years.
“Examining and processing the cabinet note for spectrum auction,” said the 100-day agenda of the DoT. The Wireless Planning Council is currently preparing the draft cabinet note.
The latest spectrum auction will be the biggest in terms of quantum of frequencies on offer if the DoT applies the Telecom Regulatory Authority of India’s (TRAI) recommendations without any change.
A whopping 8,293.95 Mhz of telecom frequencies at an estimated total base price of Rs 5.77 lakh crore are expected to go under the hammer. That’s over three times the size of the spectrum put for sale in the previous auction in 2016 at Rs 65,000 crore.
The government is meeting the industry demand to hold spectrum auctions in the second half of 2019. Industry body Cellular Operators Association of India (COAI) had favoured 5G auctions around the same time.
The ongoing financial crisis of the telcos is expected to improve in 2020 as tariff stabilisation happens. This will follow streamlining low value recharges, tariff hike in small packages and consolidation of operations to cut costs and duplications. The exercise is expected to result in gradual recovery of telcos’ losses.
Indian telcos are also getting ready to adopt 5G with their demonstrations and use cases along with network partners. Globally several countries have started 5G spectrum auctions, therefore the ecosystem is gradually developing. By the end of the 2019 calender year, it will be in a better shape.
As per the TRAI recommendations, the entire available spectrum from the 2016 auction and the new 5G spectrum bands should go under the hammer in the forthcoming auction, but the DoT may decide on its own as to how much of that would be auctioned.
In a relief to the industry, TRAI has lowered price by 42 per cent for this band at Rs 6,568 crore per MHz. For the 2016 auction, the government had fixed base price of 700 Mhz band at Rs 11,485 crore per Mhz.
In 2016, spectrum worth about Rs 4 lakh crore was put up for auction but there were no takers for this band due to its high price.
For the 5G band in the 3,300-3,600 Mhz range, TRAI has recommended a reserve price of Rs 492 crore per Mhz for a pan India minimum block of 20 Mhz, which means the operators will have to shell out Rs 9,840 crore, which is on the higher side going by global standards. The South Korean auctions, which happened just a month back, had the price at Rs 130 crore per Mhz.
The 5G band or the 3,300-3,600 MHz may be auctioned as a single band. Spectrum in 3,300-3,600 MHz band may be put to auction in the block size of 20 MHz.
To avoid monopolisation of this band, there could be a limit of 100 MHz per bidder. No rollout obligations may be mandated for spectrum in the 3,300-3,600 MHz band.
The revised provisions of spectrum cap (35 per cent overall cap and a cap of 50 per cent on the combined spectrum holding in the sub-1 GHz bands) could be extended to 3,300-3,600 MHz band, as per TRAI’s recommendations.