Spectrum auction this fiscal; pricing reforms in the works: Telecom minister

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New Delhi | Published: October 15, 2019 3:42:48 AM

Going by global standards the price of `492 crore per MHz for 5G spectrum is on the higher side as the South Korean auctions which happened last year had the price at `130 crore per MHz.

Telecom Regulatory Authority of India, trai high reserve price spectrum, spectrum auctions 2019, spectrum prices, telecom minister Ravi Shankar Prasad. spectrum industry, pricing airwaves, India Mobile Congress 2019, 5g band in india, premium 4G spectrumTelecom minister Ravi Shankar Prasad at the India Mobile Congress in New Delhi on Monday(PTI)

With the Telecom Regulatory Authority of India (Trai) unwilling to revise the high reserve price for spectrum for the forthcoming auctions, telecom minister Ravi Shankar Prasad on Monday came forward and assured the industry that the government will undertake reforms in pricing of the airwaves. He also said auctions will take place in the current financial year.

Speaking at the India Mobile Congress 2019, Prasad said the government was aware and alive to some problems and challenges being faced by the industry. “Spectrum auctions will be done this financial year… We are undertaking some reforms in spectrum pricing,” he said.

Trai had last year recommended the auction of about 8,644 MHz of spectrum across bands, including those for 5G services, at an estimated total base price of `4.9 lakh crore. But the industry, which is buckling under high debt, had argued that the proposed prices are exorbitant and unaffordable.

Though the recommended reserve price is considerably lower than what was fixed for the 2016 auctions, they are still on the higher end, considering the industry’s financial position.
For instance, the 5G band in the 3300-3600 MHz where the prices have been given for the first time, at `492 crore per MHz, for a pan-India minimum block of 20 Mhz operators will have to shell out `9,840 crore, which is seen as steep. For the premium 4G spectrum, though Trai has reduced the reserve price by 43% at `6,568 crore per MHz, still for a pan-India 5 MHz block operators will have to shell out `32,840 crore.

Going by global standards the price of `492 crore per MHz for 5G spectrum is on the higher side as the South Korean auctions which happened last year had the price at `130 crore per MHz.

At the moment, the ecosystem for 5G services is not developed so even if auctions are conducted and operators win the spectrum, they will have to wait for a considerable period before it can be effectively used.

In the last held auctions in 2016, the government had mopped a total amount of `65,789 crore, 4% over reserve price, from the country’s six operators who participated in the bidding. However, this was a lukewarm response as only 965 MHz spectrum got sold against a total of 2353 MHz put up on sale, meaning that only 40% got sold.

While the 700 MHz saw no takers, only 15 MHz spectrum was sold in the 800 MHz band out of a total of 73.75 MHz. In 1800 MHz, 175 MHz was sold against 221 MHz put on sale. In 2100 MHz only 85 MHz was sold against 360 MHz. In 2300 MHz all spectrum was sold, whereas in 2500 MHz 370 MHz was sold against 600 MHz.

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