Telecom operators, Bharti Airtel and Vodafone Idea, will likely skip the 5G spectrum auction if the government decides to held it this year. According to an ET Telecom report, both Airtel and Vodafone Idea will miss the auction owing to higher prices recommended by Trai and also the cash crunch issues. As you might be aware of by now, Reliance Jio is the only telecom operator making profits in the country, thanks to its aggressive subscriber addition, while other telcos have been posting losses for a while now. However, if the government decides to keep the auction in the calendar year 2019, Reliance Jio will take active participation so that it can stay ahead of other telcos and also roll out the services first. We have been hearing for a while that Airtel and Vodafone Idea are opposing the 5G spectrum auction this year as they're slowly getting back into posting profits.
Bharti Airtel Believes the Prices of 5G Spectrum are Way High
When Trai released the auction prices of the 5G spectrum, every telco expressed their disappointment on the prices. “It doesn’t make sense for us to buy at these levels when the ecosystem won’t be developing for the next two to three years,” a top Bharti Airtel official told ET Telecom. The scenario is pretty much similar to 2016 spectrum auction; To recall, in the previous auction which was held in 2016, telecom operators ignored the entire 700 Mhz spectrum because of steep prices. Later on, Trai said that it would re-auction the 700 Mhz spectrum lowering the prices, but that didn't happen.
The Bharti Airtel official further added that "a telco would have to shell out Rs 50,000-Rs 55,000 crore for 100 MHz and service the debt for the next three years, despite having no returns."
In August 2018, Trai released price recommendations on 700 Mhz band and 5G spectrum, post which analysts and telecom operators expressed their disappointment on the pricing.
Vodafone Idea Isn't Ready to Go for Big 5G Deployments
Vodafone Idea, which is currently the leading telecom operator in India, also backing off from the 5G spectrum auction this year. Vodafone India and Idea Cellular announced merger back in 2017 and it was formed last year. The telco is still in the process of merging the networks and analysts believe that Vodafone Idea is not yet ready for big 5G deployments.
Right now, Vodafone Idea is focusing on increasing its 4G presence in key markets and the company is incurring a lot of losses with every passing quarter, so it'll be hard for the company to invest in 5G this year. Also, Vodafone Idea does not have pan-India 4G coverage like Bharti Airtel and Reliance Jio, which will be a crucial factor for any telco to invest in 5G.
Reliance Jio to Invest Heavily in 5G
On the flip side, we have Reliance Jio, which is actively pushing the government for 5G spectrum auction. Jio is the lone LTE-only telco in India right now with Airtel trying its best to match Jio in terms of 4G availability. At the moment, it's unknown when the government is planning to hold the next spectrum auction.