Telecom operators are likely to once again give a miss to the premium 700 MHz band spectrum, citing the high price. The band has remained unsold in the previous two auctions – 2016 and 2021. Industry executives told FE that the absence of the 700 MHz band in their portfolio would mean that standalone networks offering both voice and data services would get impacted, leading to patchy 5G services in the first few years.

The operators do not seem keen on the band despite the price reduction of 40% to Rs 3,927 crore per MHz compared to the 2021 auctions, as for a 30-year lease, it works out to be nearly the same. For buying 5 MHz on a pan-India level, telcos would have to shell out Rs 20,000 crore for a 20-year period. Since the Telecom Regulatory Authority of India (Trai) has said that if spectrum is leased for a 30-year period, the price would be 1.5 times of the 20-year span, operators would have to spend Rs 30,000 crore. This is hardly a reduction from the March 2021 auctions when it was priced at Rs 6,568 crore per MHz and operators needed to shell out Rs 32,840 crore for a 20-year lease period.

As is known, even after reducing the reserve price by around 36% in the main 5G band of 3,300-3,670 MHz by 36% to Rs 317 crore per MHz and fixing the price of the 24.25-28.5 GHz spectrum band at Rs 6.99 crore per MHz, operators would need to fork out Rs 55,938 crore to buy a combination of these two for the pan-India level. If they spend another Rs 30,000 crore on 700 MHz, their total spend would go up to Rs 85,938 crore, which would be prohibitively high.

Operators FE spoke to said that since spectrum in the 3,300-3,670 MHz and 24.25-28.5 MHz are for data purposes – the core of 5G –, it makes sense for them to first buy these bands. “We can wait longer to buy 700 MHz. The prices for it have been brought down twice in the past and maybe it would be lowered again next year, so one can buy it then,” said an industry executive.

Though not specifically mentioning the 700 MHz band, industry body Cellular Operators Association of India (COAI) on Tuesday expressed its disappointment with the reserve prices recommended by the Trai, calling them too high. “Throughout the consultation process, industry had presented extensive arguments based on global research and benchmarks for significant reduction in spectrum prices. Industry recommended 90% lower price, and to see only about 35-40% reduction recommended in prices, therefore is deeply disappointing, COAI said. “If one were to look at the pan-India price of 3.5 GHz spectrum, then we are back to square one with effectively no change and will nullify the relief provided by Union Cabinet in the year 2021,” COAI said, urging the regulator to revisit its pricing recommendations.

However, Trai chairman PD Vaghela told FE that the reserve price recommendations are rational and based on scientific calculations.