DoT promotes lower prices for 5G, 700 MHz bands, Telecom News, ET Telecom

Mumbai: The Ministry of Telecommunications (DoT) estimates that a reduction in the base price of 5G waves and the 700 MHz band plus a lower upfront payment will be necessary to encourage telecom operators to bid for spectrum in the next scheduled sale in the course of 2022, a senior government said official.

“It is better if the telecom operators push their case again with the Telecommunications Regulatory Authority of India (Trai), and lowering the price and lower upfront payment is the best way forward,” he said. said the manager, asking not to be named.

At the March auction, the government managed to sell only 37% of the more than 2,300 units of spectrum across seven bands on sale, with the highly efficient but expensive 700 MHz band being unsold for the second time, due to what the carriers claim, its high base price.

The DoT is also likely to seek a new base price for the 5G-only 3300 MHz-3600 MHz band, the 700 MHz band, and other new bands that can be used for next-generation technology in the near future. Thereafter, Trai will have to start a new consultation process to arrive at the prices. The regulator generally reduces the prices of unsold spectrum.

Industry executives say operators Reliance Jio Infocomm (Jio), Bharti Airtel and Vodafone Idea (Vi) are likely to ask Trai to reduce the price of the 3300-3 600 MHz and 700 MHz bands by at least 50%.

No urgent need for telecom operators to bid

They will also seek to increase the moratorium period on payment for spectrum beyond two years and reduce the upfront payment for waves that will be put up for sale at the next auction.

“The 700 MHz band, which is the most efficient sub-GHz 4G band, and the 3.3-3.6 GHz frequencies for 5G must be reduced by 50-60%,” said a senior executive of the industry, adding that only then will telecom operators show. some interest in auctions.

The DoT had previously accepted Trai’s recommendation of Rs 492 crore per unit for 5G spectrum in the 3300-3 600 MHz bands, but not all telecom operators have said they will not bid at those levels. A CLSA report says 5G prices in India are the most expensive in the world, four times higher than South Korea and seven times higher than in the UK.

Trai had reduced the price of the 700 MHz band by 43% from the 2016 auction level to Rs 6,568 crore per MHz for pan-Indian spectrum, which was again unsold in March.

The official said the Department of Telecommunications (DoT) is also likely to ask the Telecommunications Regulatory Authority of India (Trai) to set “a starting price for the sub-GHz band of 600 MHz”, which has not been auctioned before.

A second telecommunications executive said the industry is also likely to push for a moratorium on payment for longer spectrum in addition to a reduction in the upfront payment.

Until now, winning bidders could pay the full amount up front, 25% to 50% – depending on the installment – and the balance on up to 16 equivalent annual installments after a two-year moratorium.

“The reserve price for 700 MHz spectrum is too high and the band has not seen demand in successive auctions. We don’t expect that to change unless the reserve price is lowered sharply, ”said Kunal Vora, senior telecom analyst at BNP Paribas.

He added that the 3300-3600 MHz spectrum, also known as mid-band airwaves, is probably the most popular band for 5G deployment. “Operators will need a large amount of spectrum in this band to have an efficient 5G network and for that they would prefer a low price per MHz.

“Operators have high debt levels and are likely to prefer the low upfront payment, moratorium and deferred payment liability,” Vora added.

The second executive added that if prices are not reduced and certain other conditions are not relaxed, telecom operators do not have a pressing need to bid, especially since Airtel and Jio have already acquired 4G bands in March that are effective for 5G deployments.

The three telecom operators did not respond to ET’s requests.

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