NEW DELHI: The Centre’s decision to go ahead with telecom airwaves sale in March-April 2020 is flawed following the sectoral financial stress and inadequate quantum of spectrum meant for fifth generation (5G) services roll out, a Delhi-based group said.
Prime Minister Narendra Modi-led government is proposing country’s largest-ever radio waves auction that may potentially fetch close to Rs 4.9 lakh crore from the 8,300 MHz across eight spectrum bands to be brought to table.
Friday, the Digital Communications Commission (DCC), a highest decision-making committee of the Department of Telecommunications (DoT) has approved the plan for next airwaves sale to commence in March-April 2020, setting aside industrywide depleting financial health concerns.
“The DCC’s decision to proceed with spectrum auctions in the near future may be forth with challenges,” the Cellular Operators Association of India (COAI) director general Rajan S Mathews in a statement said.
Mathews further said, “With spectrum reserve prices four to six times higher than that of similar spectrum sold recently in several countries, high levels of debt and prevailing financial stress in the sector, telecom service providers will find it very difficult to raise funds to participate in the auctions.”
India’s telecom industry which is now shrunk to a three-player market following the disruptive entry of billionaire Mukesh Ambani’s telecom foray with Reliance Jio in September 2016, is beset with a cumulative debt of nearly Rs 8 lakh crore.
While the next spectrum auction has become a prestige issue as well as a source of much-needed revenue to overcome fiscal deficit for the government, industry has repeatedly expressed its inability to purchase new frequencies including in 3.3GHz-3.6GHz reserved for 5G services owing to high or about Rs 490 crore per unit base price.
The quantum of spectrum in the 5G band being put up for auction, according to the industry veteran, will be only 175 MHz, woefully inadequate for operators to roll out robust 5G networks and services.
“It will be prudent to let the sector regain some financial strength from the recent initiatives undertaken before scheduling the auction. The interim period can be used to design and test India specific 5G use cases,” Mathews added.
In addition, the price of premium 700 MHz band that went unsold at Rs 11,485 crore per unit in 2016, has now brought down to Rs 6,570 per Mhz.
Oil-to-retail conglomerate Reliance Industries telecom arm Jio which was earlier denying any sectoral stress, has too lately expressed concerns over high reserve price.
Loss-making Vodafone Idea and Sunil Mittal-driven Bharti Airtel that are facing statutory dues of over Rs 53,000 crore and Rs 35,500 crore, respectively, are seriously embroiled into financial mess and sought reprieve from the government which has though offered an interim relief with a two-year moratorium for spectrum pay outs.