Relook: Telecom panel may reduce spectrum prices for auction

Sources indicated to FE that though the Telecom Regulatory Authority of India has not lowered the reserve price despite the DoT’s request for a review, the government’s inter-ministerial panel may do so.

With the Supreme Court ruling on the adjusted gross revenue dues being through, the department of telecommunications is now soon going to finalise the pricing of spectrum for the next round of auctions. Sources indicated to FE that though the Telecom Regulatory Authority of India has not lowered the reserve price despite the DoT’s request for a review, the government’s inter-ministerial panel may do so.

There are two reasons due to which the panel may look at reducing the reserve price. The first being that now it is exactly known how much operators like Bharti Airtel and Vodafone need to pay as their AGR dues over the next 10 years, and second, since the operators are not supposed to buy equipment from Chinese vendors, their procurement cost may rise by around 15-20%.

It is likely that first the auctions are held for 4G spectrum and the remaining spectrum in other bands and that of the 5G is held later.

Sources said, a draft Cabinet note has been prepared by the DoT, which includes all the details such as reserve price, quantum of spectrum to be put up for auction etc, which would be circulated to key ministries for consultations.

The Digital Communications Commission (DCC), the highest, inter-ministerial, decision-making body in the DoT, had in December last year cleared the reserve price for the auctions. At that time, the panel decided against reducing the reserve price. In May this year, the DoT decided not to auction 5G spectrum in the upcoming sale.

As per industry observers, the high reserve price for spectrum is likely to be dampener as operators will find it hard to raise that much money. Due to the precarious financial condition of the telcos, the government had last year in November announced a moratorium of two years for installment payments for the past auctions.

The Trai in August 2018 had recommended reserve price for the next round of auctions, which were considerably lower than what was fixed for the 2016 auctions but it was still seen on the higher end, considering the industry’s financial position.