- Trai had recommended the prices to be Rs 492 crore per MHz
- The telecom industry is under a Rs 8 lakh crore debt
- DoT's efforts might bring down the reserve price by half
The telecom industry in India remains buried under a massive debt which now surpasses Rs 8 lakh crore. The concerns in the industry about the financial health of the sector have been rising day by day, and the companies are not the only ones concerned now. The financial situation of the industry is in such a situation that even the government had to do some intervention in this regard. The telecom operators are also looking for some support from the government in the form of relief so that the industry remains viable. The trio which leads the industry including the leader, Reliance Jio, and the incumbents Vodafone Idea and Bharti Airtel have massive dues, especially the latter two. However, one of the major burdens that might make the situation even worse for these telecom operators is the fact that they might have to pay a hefty amount for the 4G and 5G airwaves in the upcoming spectrum auction. There has been a lot of demand from the telecom companies to lower the reserve prices of the spectrum, but until now, there was no progress on that front. But, now it seems that there could be a ray of hope for the telecom companies.
Trai Recommended Pricing Too Expensive for Telcos
Now, to recall, when the government initiated talks about the spectrum sale in late 2019 or early 2020, it approached the Telecom Regulatory Authority of India (Trai) for getting recommendations on the reserve price of the spectrum. When DoT (Department of Telecommunications) asked Trai to give recommendations on the pricing, Trai pegged the cost at Rs 492 crore per MHz. However, with this expensive pricing, the telecom operators were not pleased. The telcos felt that the price was too high for them to bid and would place them under extreme financial pressure and the Department of Telecom was with on the telcos on this stance. As such, DoT asked Trai to reconsider the spectrum pricing, which was unfortunately dismissed by the regulator. Later on, as per a report, the DCC was to consider the new pricing of the spectrum and then approve it.
DoT to Mull for Relief
Now, in a new turn of events, it is likely that the Department of Telecommunications (DoT) bring down the reserve prices of the spectrum down by 50%. Also, the Digital Communications Commission (DCC), previously known as the Telecom Commission, will also discuss this issue to cut the proposed prices of the spectrum for the upcoming 4G and 5G auction. If this move goes through, then it would come as a big relief to the telecom operators especially for the incumbents, Bharti Airtel and Vodafone Idea.
Upcoming Sale to Be the Largest In the Industry Till Now
It is also worth noting that the upcoming spectrum sale in the industry is going to be the largest one in the sector until now. Also, the prices proposed by the Trai were considered to be very expensive, which would put an immense burden on the industry which remains laden under massive debt. With this being said, Trai had turned the needle towards the government in its statement, saying that the centre would play a major role in deciding the success of the auction depending on how it markets the spectrum sale. Going by the previous prices, the government would have amassed Rs 5.6 lakh crore if all of the spectrum would have been sold on the recommended price. This auction would include 4G airwaves in six bands and 5G spectrum for the first time, which will be in the 3.3-3.6 GHz band. The main decision on the matter of pricing would come from the DCC, which remains the apex authority in the telecom industry.
Arpit spends his day closely following the telecom and tech industry. A music connoisseur and a night owl, he also takes a deep interest in the Indian technology start-up scene and spends rest of his time spilling poetry and stories on paper.