The Department of Telecommunications (DoT) released Notice Inviting Applications (NIA) for the 5G spectrum auction on Wednesday. The auction is all set to take place on July 26, 2022. DoT said that the telcos wouldn’t have to pay SUC (Spectrum Usage Charges) along with the Bank Guarantees (BGs) for the spectrum they acquire during the upcoming auction. This means that the outgo of cash for the telcos will reduce significantly.
A DoT official asking not to be named told ET Telecom that this move would reduce the yearly costs of the telcos that go towards the government. The Telecom Regulatory Authority of India (TRAI) had suggested a 39% reduction, but due to this move from the government, the telcos will see around 40% to 50% cost reduction in their annual payment to the government. This will benefit the struggling telecom operator Vodafone Idea (Vi) a lot. Along with Vi, even Airtel and Jio will benefit a lot as they can expedite the 5G rollout with all the saved money.
Telcos Asking for a 90% Cut Was a Little Unreal
The telecom operators were asking for a 90% cut in the reserve price of the airwaves from the 2018 levels. But it was a little too ambitious of an ask. TRAI had cut down the prices by 39%, which is still a significant number, and the telcos should take it up happily.
The relief measures that have been provided by the government are just enough to get the telecom sector going. 5G is going to open up a new stream of revenues from the enterprise sector, and that will further help the telcos to propel their business upwards.
The telecom players are indeed saving a lot of money, but it is important to remember that there are still thousands of crores that both Airtel and Vi owe to the government in the form of Adjusted Gross Revenue (AGR) dues and other interests.