Trai reserve price for 5G spectrum set at Rs 492 cr per Mhz, lowers that of 4G band by 43%

Setting the ball rolling for next spectrum auction, telecom regulator Trai on Wednesday recommended reserve price for next generation 5G spectrum, which will be auctioned for the first time in India, at Rs 492 crore per Mhz, while lowering the price for premium 4G band - 700 Mhz, by almost 43% at Rs 6,568 crore per Mhz.

The reserve price for proposed spectrum band for 5G services in 3300-3600 Mhz frequency has been fixed at Rs 492 crore per Mhz. This will be the first time that 5G spectrum will be put up for sale.

For 700 Mhz, the earlier recommended reserve price was at Rs 11,485 crore per Mhz, but this spectrum remained unsold during the last spectrum auction in October 2016 because of a steep price.

700 MHz band is a sought after band for LTE deployment around the world due to its efficiency and higher penetration inside buildings. LTE device eco-system is developing fast in this band.

In its recommendations on spectrum auction on Thursday for various bands — 700 Mhz, 800 Mhz, 900 Mhz, 1800 Mhz, 2100 Mhz, 2300 Mhz, 2500 Mhz and 3300-3600 Mhz - the Telecom Regulatory Authority of India (Trai) said all available spectrum should be auctioned. About 4948 Mhz spectrum is available for sale and at reserve price, if the entire spectrum gets sold in auction, the government may earn revenues of over Rs 5 lakh crore.

The telecom department is in the midst of formulating standards for next generation 5G technology which will have artificial intelligence, internet of things, machine to machine communications and other virtual healthcare and automated services at much higher data speeds.

Globally, only South Korea has auctioned spectrum for 5G, while the US and Europe will do it by this year end.

The government is yet to fix a date for the next round of auction, but looking at the financials of the telecom industry, it is unlikely that service providers would be willing to spend on buying spectrum. The industry together is battling a debt level of Rs 7.6 lakh crore.

With the aggressive competition brought in by the new player Reliance Jio, the profits and revenues have taken a hit.

In 2016-17, the government had raised Rs 65,789 crore from spectrum sale. There was no auction in the last fiscal.

In 800 Mhz band, the reserve prices fixed is 20% lower at Rs 4,651 crore per Mhz compared to previously recommended price at Rs 5,819 crore per Mhz.

Watch this Zee Business video here:

The entire chunk of 5G airwaves available in the 3300-3600 MHz band should be auctioned, barring the 25-odd units being currently used by Isro. “To avoid monopolisation of this band, there should be limit of 100 MHz per bidder. Since the TSPs are allowed to trade their partial or complete spectrum holding to another TSP, the limit of 100 MHz spectrum in 3300-3600 MHz band, shall also apply for spectrum trading,” Trai said.

A base price of Rs 3,285 crore per Mhz for 1800 Mhz band has been fixed on a pan India basis, compared to price of Rs 2873 crore per Mhz. For 900 Mhz, a base price of Rs 1622 crore has been fixed against Rs 3341 crore earlier.

Rajan S Mathews, director general, Cellular Operators Association of India (COAI) said, “It is too early to comment as we are currently reviewing the recommendations. We are glad that the government has decided to bring down the price of spectrum, especially for the 700 MHz band. “

However, considering the current financial stress the industry is going through, lowering the spectrum prices alone won’t fix anything.

Source: DNA Money