Department of Telecommunications (DoT) has left the final call for setting the price of the spectrum on the cabinet. DoT has not suggested any change or reduction in the price of the spectrum as proposed by the Telecom Regulatory Authority of India (Trai). The next spectrum auction is likely to take place in the first quarter of 2021. Since DoT hasn’t suggested any price modification, the government body has left the decision to the Union Cabinet. Thus it will be the Union Cabinet that will decide on the pricing of the spectrum for the next auction.
Cabinet to Decide on the Pricing of Spectrum for Auction
As per a report from the Financial Express, DoT has worked on a draft note for the Cabinet which outlines the reserved prices of the spectrums to be auctioned next year, including 4G. As for the 5G auctions, they are not even expected to place next year since a call on the final pricing for spectrum can’t be taken by the Cabinet at the moment.
Union Cabinet is going to be making the decision on whether the spectrum prices should be lowered or not. The Cabinet might just reduce the price because of two reasons. First that telcos now exactly know the amount of adjusted gross revenue (AGR) dues they have to pay within 10 years. Second, since operators aren’t purchasing new gear and equipment from Chinese vendors, it will result in increased procurement costs by 15% to 20% for the telcos.
Telcos and the other constituents of the industry have expressed that the reserved prices of the spectrum set by the government are way too expensive. For example, the price for the 5G band in the 3,000-3,600 MHz was announced at Rs 492 crore per MHz pan-India and the minimum block was set at 20 MHz. This meant that the telcos would have to pay Rs 9,840 crore for one block of the 5G band.
The main concern for the operators at the moment would be the price of premium 4G spectrum since 5G auctions won’t take place anytime soon. Trai has reduced the premium 4G spectrum price by 43% as compared to the 2016 auctions. Even after that, at Rs 6,568 crore per MHz for a block of 5 MHz, the companies will have to pay Rs 32,840 crore which is still very high.
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