In more than a decade, the telecom department in India has only been able to sell Rs 5.64 lakh crore worth of spectrum to the telcos despite putting up spectrum worth Rs 17.23 lakh crore in total. The timeframe we are talking about is between 2010-2024, so that's 14 years. Why did the telecom department wasn't able to sell spectrum worth Rs 11.6 lakh crore. Well, here's the reason.
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In a report titled, 'The diminishing returns of SMRA (simultaneous multiple round auction): A data driven analysis of India’s spectrum sales (2010-2024)', VJ Christopher, DoT's wireless advisor said that this is due to high-priced spectrum. After the 3G auction in 2010, inflated expectations got set for the government. The telcos paid a premium in the 3G auction, but they weren't going to do it every time.
The reserve price for the spectrum is first recommended by the Telecom Regulatory Authority of India (TRAI), and then later on DoT (Department of Telecommunications) finalises it. The market, with plenty of operators before 2016 was very competitive. After that, there have been only few operators, with only two now having profitable businesses. There's less incentive for the telcos to spend plenty of money on the premium priced spectrum.
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The report said, "Since 2016, the WP/RP ratio has flatlined at 1.0. The reserve price is no longer a floor for bidding but has become the fixed sale price."
Even for the 700 MHz band, the reason Airtel didn't go for it is because of its premium pricing. Jio was the only taker, only after the 700 MHz band was left unsold for many auctions. The telcos have previously expressed their disappointment over the premium priced airwaves. It will be interesting to see if the government takes note of this and reduces spectrum price.
