How Would Reducing Spectrum Auction Prices Help?
The Department of Telecom's (DoT) plans to hold the spectrum auction before the fiscal has not been put off and discussions are on to cut the auction prices to make it affordable for telecom companies, according to official sources.
There could be up to a 35 per cent reduction in spectrum auction prices though the matter is still under discussion, the sources said.
"We are trying to hold auction this fiscal before March 31, 2020, and, so far, the decision to hold it in 2019-20 stands," a DoT source said.
"We are discussing the reduced base prices of the spectrum, and broadly the Minister has already said during the India Mobile Congress that government will review spectrum price for this year's auction but the quantum is being decided, which can be up to 30-35 per cent less," he said.
The Telecom Commission at its meeting later this month will consider the matter of spectrum base price reduction, the source added.
The DoT is of the opinion that the present situation of the telecom companies are not congenial for them to bid at the current prices. Indian spectrum prices are the highest in the world.
The DoT had earlier asked The Telecom Regulatory Authority of India (Trai) to look at the possibility of lowering spectrum base prices, which the regulator had turned down.
Apart from 4G spectrum, India is planning its first auction of 5G airwaves this year.
On October 24, the Supreme Court in a long pending dispute over adjusted gross revenues (AGR) ruled in favour of government and said all revenues of the telecom licensee are liable to be computed under AGR and, hence, part of it is to be paid to the government as licence fee. This has added to the existing pressure on the telcos.
This, added to the spectrum fees payable now stands provisionally at Rs 1.3 lakh crore which has to be paid the companies by January 24.
The industry -- Airtel, Vodafone Idea and Jio -- is already burdened with a Rs 7.5 lakh crore debt due to intense competition and cheap pricing of data and voice services.
Trai has suggested a base price of Rs 492 crore per Mhz for 5G spectrum, which amounts to a very exorbitant price of Rs 50,000 crore for 100 MHz. For 5G services a minimum 100 Mhz is necessary to offer full capacity services to industries and enterprises as 5G is predominantly targeted at industry users.
"We are also in the process of undertaking some reform in the spectrum pricing," Union Minister Ravi Shankar Prasad had said.
Prasad has also written to the Finance Minister, seeking relief for telcos by pointing out that AGR had shrunk to Rs 1.39 lakh crore in 2018-19 from Rs 1.85 lakh crore in 2016-17, reflecting the sector's poor health.
There was no auction in 2017-18 and 2018-19. In 2016-17, the Union government raised Rs 65,789 crore through the sale of spectrum. Total spectrum put up for sale then was 2,354.44 MHz across seven bands, but the government managed to auction only 965 MHz, or only 41 per cent of the total airwaves.
In 2018, the telecom regulator recommended the auction of about 8,644 MHz of frequencies across eight signal bands, including 4G airwaves in the 700 Mhz, 800 Mhz, 900 Mhz, 1800 Mhz, 2300 Mhz and 2500 Mhz bands, and a debut for 5G spectrum in the 3.3-3.6 Ghz band, which, at base price, was estimated at Rs 5.6 lakh crore