The next big event in the telecom industry is the auction of 4G and 5G airwaves. The telecom operators, the Department of Telecommunications (DoT) and the Telecom Regulatory Authority of India (Trai), all have been following up with the issue of the upcoming auctions. Trai has already recommended the reserve prices of the spectrum to the Digital Communications Committee (DCC) which is yet to approve the pricing in its upcoming meeting. On the other hand, Bharti Airtel and Vodafone Idea are two telecom operators which have been requesting for an extension on the date of auction till now. The Mukesh Ambani led telecom operator, Reliance Jio was the only company in support of early spectrum auction. However, as per a new ET Telecom, even Reliance Jio has joined incumbents in pushing for a delayed spectrum auction.
Reliance Jio Joins Bharti Airtel and VIL in Support of Delayed Spectrum Sale
As per a senior executive, Reliance Jio wants that the upcoming 5G airwaves auction should be put off until the telcos carry out trials of the fifth-generation network technology and come up with use cases for the spectrum which are priced very high. This means that finally, Reliance Jio has sided with Bharti Airtel and Vodafone Idea. Previously, Airtel and VIL were the companies standing against the early auction. But, now Reliance Jio has joined the unison. Then, there is also the case of 4G airwaves which the telcos want to be auctioned early because it will help the telcos in easing network congestion and cater to the increasing demand of data.
Under anonymity, the senior executive remarked, “5G spectrum should be auctioned in 2021 … Nobody will buy 5G now because there is no use case, the price is exorbitantly high.” This new statement indicates that Reliance Jio has decided to switch its stance for the 5G airwaves. Previously, Reliance Jio was pushing for early 4G and 5G airwaves auction. Bharti Airtel, on the other hand, had asked for a postponement in the case of 5G airwaves while looking for early auctions in 4G airwaves. Vodafone Idea has asked for deferred auctions for both 4G and 5G airwaves.
Reliance Jio Looking Forward to Reduce Debt in 18 Months
It is worth noting that the sector regulator had recommended a pan-India base price of Rs 492 crore per MHz for 5G radio waves to be auctioned in the 3.3-3.6 GHz bands. The regulator also said that the telcos should buy in the blocks of 20 MHz. This means that the telcos would need to shell out at least Rs 9,840 crore for pan-India 5G airwaves, or around Rs 50,000 crore for the 100 MHz that the telco would require for an effective rollout.
The senior executive also said that currently the telcos should be provided with the spectrum for some time to develop use cases and see the earning potential. It is also worth noting that Reliance Jio has shared its plans of becoming a debt-free company in the next 18 months. While the company is the only profitable telco in the telecom sector, it also remains under a debt of Rs 75,000 crore with a debt to EBITDA ratio, which is 3.4 times higher than Bharti Airtel.